Top Reasons Landlords Should Consider Forming a Business Entity for Properties

Written by Landlord Property Management Magazine on . Posted in Blog

Limited Liability Company operation agreementOne of the best asset protection tools available to landlords today is forming business entities for their properties. An entity option that can be a good fit for landlords is the LLC. This type of entity provides flexibility to be taxed as a partnership or a corporation, while providing its owners with the limited liability of a corporation. By designating a business organization for their individual properties, landlords can simplify several corporate and legal functions – enabling them to focus on the needs of their tenants and maintenance of their property.

Here are a few reasons why landlords should consider choosing the LLC:

Choose How the Business Is Taxed

With an LLC, landlords can keep their business and personal finances separate, while maintaining the freedom to choose how they are taxed. This flexibility allows landlords to be taxed in a manner that produces the lowest tax bill.

Normally, an LLC provides for pass-through taxation, which means income, losses and other tax items are reported on the members’ individual tax returns. Many business owners find this feature helpful when they consider the numerous maintenance occurrences that come along with owning rental property. However, business owners can also elect to have an LLC taxed as a corporation, which provides more flexibility in structuring compensation. And, more recently a new tax—the net investment income tax—has created additional complexity in determining the tax structure, particularly with regard to real estate businesses. Given the complexity involved in determining the impact of the net investment income tax, property owners should seek guidance from an accountant who is well-versed in the rule that apply to real estate owners.

Reduce Risk on Property Investments

Another useful aspect of an LLC, S corp or C corp is that individual assets of the business owner cannot be reached to satisfy debts and other financial obligations of the business. This is a great safety measure that ensures a member’s risk of loss is limited to the amount of capital invested in the business.

The limited liability factor directly relates to harm that might occur from the owner’s rental business. Landlords are generally protected from any tenant or visiting person’s injury that might result in legal action. The harmed party can sue the owner’s business, but the owner’s personal assets are protected.

However, this doesn’t overrule instances where landlords are personally responsible for harmful activity. Though some of the responsibilities associated with providing a livable environment are outsourced by larger entities, landlords with a smaller operation can be personally held accountable for certain housing hazards.

Also, if landlords fail to clearly separate personal and business assets, they can forfeit this asset protection. In order to capitalize on the limited liability aspect of an entity, landlords must separate personal and work-related finances. If a landlord has multiple properties, each property should be registered as its own entity. This ensures any incident tied to one property will not impact any of the others. Developing distinct financial entities sets your business up so that responsibilities associated with most property related issues fall on the respective entity’s resources and not personal assets.

From start to finish, properly establishing and operating a real estate business can position you for success, while lowering your tax bill and protecting what you have worked so hard to achieve.


JenniferFriedmanJennifer Friedman is the CMO of the small business segment of CT, a Wolters Kluwer Company, which provides legal compliance solutions to small businesses. In this role, Jennifer directs all activities related to digital marketing and advertising to help build the brand through innovation, partnerships, and enhancing the customer experience.  Visit https://ct.wolterskluwer.com/

How Renters Are Finding and Paying for Apartments (Infographic)

Written by Landlord Property Management Magazine on . Posted in Blog

Check out the most recent stats on renters in target cities across the U.S. See how they are finding housing, who’s mobile, what amenities they crave and more. What does renter behavior look like in your area? Download the infographic and share on your site!

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appfolio Appfolio | Company Website | LinkedIn Connect |

AppFolio, Inc. develops Property Management Software that helps businesses improve their workflow so they save time and make more money. Appfolio submits articles & blogs including topics of Resident Retention, Improved Owner Communication, Time Management, and more.

4 Reasons It’s Time to Enhance Your Property Management Website with Photos

Written by Landlord Property Management Magazine on . Posted in Blog

13412We’re living in a visual culture where images increase emotional connections and enhance relationship building strategies. If you’ve spent more than twenty seconds on social media, you’ve noticed that video and static images garner more comments than text-only posts. Don’t take our word for it, there’s an abundance of research to back up these claims.

Did you know that adding photos to your property management website can dramatically improve page views and site traffic?

Articles with visual elements capture 94% more views, more blog post comments and stronger reader engagement than articles without images. Tagging and labeling images for SEO effectively drives traffic to your site and expands your audience, too.

Images allow you to build your brand with visual representations that express your ideals, showcase the people on your property management team and share common experiences with current residents.

Processing images is easier on the brain, too. Research from noted psychologist Albert Mehrabian demonstrates that only 7% of communication is verbal.1 Written and spoken language takes more time to process. Our minds react quicker and absorb information faster when exposed to visual stories and images than other communication methods.

When you have the power to deliver your message 93% faster to online customers, why wouldn’t you take advantage of visual stimuli?

Photographs on social media sites gives you freedom to express your sense of humor, motivate viewers to take action and create powerful, authentic brand impressions to build trust with your customers.

People want to share their experiences with others. Visual formats allow people to tell their personal story outside the boundaries of grammar and syntax.  And, people want to “see” experiences from friends and family, or even strangers with common interests, hobbies or causes.

The social media data sharing machine generates millions and millions of conversations every day. Research statistics published by Newstext is mind boggling.

Every minute of every day and every day of every year:

  • Twitterers tweet nearly 300,000 pieces of content
  • Instagram users add more than 215,000 photos
  • YouTube files grow with 72 hours of new video
  • Pinterest users pin more than 3,400 new photos
  • Vine users share 8,333 new videos

And, those numbers don’t include Facebook status updates (more than 2.4 million), WHATSAPP photo shares (344,000+) or any of the other popular social sites.

Combining engaging text with science-based color schemas motivates viewers to take action.

Although not everyone will have the exact reaction to certain colors because they bring personal experiences, cultural differences and preconceived notions with them when they visit your site, exploring color psychology can help you fine-tune your brand messages. This article published on Entrepreneur.com gives you some unique clues about how images and color work together to inspire and motivate viewers.

Adding photos and other visual elements to your blogs is no longer optional. If you want to propel your property management website and blogs to the top of the search engine results, add images. Want to engage your viewers and drive traffic to your community? Add photos. Looking for ways to convert more browsers to buyers? Add photos.

Do you have a story to tell about adding images to your online sites? Comment below and share it with our followers.


appfolio Appfolio | Company Website | LinkedIn Connect |

AppFolio, Inc. develops Property Management Software that helps businesses improve their workflow so they save time and make more money.  Appfolio submits articles & blogs including topics of Resident Retention, Improved Owner Communication, Time Management, and more.

Ugly Duckling Market’s, Get their Swan On

Written by Landlord Property Management Magazine on . Posted in Blog

153178After conducting its year end survey, real Answers found rents were up in roughly seventy five percent of the 39 markets published from the RealFacts database.   What’s different this time is where the growth is occurring.  Not in the sexy markets like San Jose and Seattle, where rent growth has slowed.  Even the city of San Francisco is down slightly in the 4th quarter.

December when real Answers conducts its survey is typically a time where fewer renters are prepared to make a move, compared to March and September, the busiest time for apartments.  There is also a shortage of units of rents.   Rescue in the way of more supply is slow coming to the market, but not for lack of enthusiasm on the part of developers who really want to build them.  It’s slow because the process of building them, especially in high barrier to entry markets like San Francisco is slow and very, very expensive.

San Francisco added roughly 4,000 new housing units in 2014—not enough to have a noticeable impact on the overwhelming need for housing, in particular, affordable housing.  Not affordable in the traditional sense of the word that refers to low income households, although that is desperately needed as well, but affordable by the middle class.  People with average incomes or even pretty good incomes aren’t the target market for the new apartments.   Most are beautiful, thoughtfully appointed, convenient communities that offer amenities and service of a four star hotel, and although we’d all love to live this way, most of us simply can’t afford to.

Enter the ugly duckling markets.   With insufficient affordable housing to meet the demand, many renters are forced to move elsewhere like Vallejo, California which takes the number one spot for rent growth this quarter.  Its rents are up $22 from $1,288/mo. to $1,310/mo.  Reno ranked in the top five up $11/mo. from $841/mo. to $852/mo.  Major metros in the top five are Miami, up $20/mo. from $1,399/mo. to $1,419/mo. and Los Angeles up by $13/mo. from $1,857/mo. to $1,870/mo.

Markets at the bottom of the quarter are Baltimore, down $13/mo. from $1,374/mo. to $1,361/mo., Santa Rosa, down $12/mo. from $1,579/mo. to $1,567/mo. Other markets losing ground are Oxnard, California, Boulder, CO and Kansas City, MO.

Occupancy rates were mixed, half up and half down.  The overall national occupancy rate is at a record high of 94.2% in 2014.

As we’ve done for several years now, we are posting the top ten markets of 2014.  It was a banner year for nationwide rent growth and apartments still have a full head of steam going into 2015. San Francisco and San Jose are at the top, but what’s different is the appearance of markets that don’t usually make the cut like Vallejo, Sacramento and Santa Rosa.  These are outlying areas of primary markets like San Francisco that are likely benefiting from a ripple effect.

MSA Average Rent Yr-over-Yr Average

Dollar increase

Annual Percentage Increase
San Francisco $2,294 $251.00 12.3%
San Jose $2,365 $207.00   9.6%
Denver $1,223 $133.00 12.2%
Vallejo $1,310 $129.00 10.9%
Santa Rosa $1,567 $122.00   8.4%
Seattle $1,349 $  99.00   7.9%
Portland $1,104 $  88.00   8.7%
Atlanta $1,011 $  76.00   8.1%
Sacramento $1,072 $  73.00   7.3%
Colorado Springs $   865 $  61.00   7.6%
 
National Average $1,164 $  71.00    6.5%
 Source:    RealFacts Database 4Q14

 

2014 was a unique time in apartment history.  People want to rent apartments but it’s a challenge to find and afford them in a convenient location.  Rents are going up but builders are struggling to bring enough supply to meet the demand.  Investors are hungry to buy apartments but the opportunities are price prohibitive, lenders require a first born sacrifice and returns take years or decades of consistent rent growth to break even.

It’s like the movie Zoolander.  In it, two male models Derek Zoolander and Hansel, rival each other in an underground “walk off” challenge in an attempt to demonstrate their physical superiority.  One walks and the other duplicates and elaborates.  Hansel finally wins only when he reaches into his pants and pulls out his underwear.   2015 is going to be another year of tugging at our underwear in the hopes we can release them from our pants in one piece.

See 4Q14 real Answers Synopsis


For additional quotes, insights or to request a specific market overview, send an email to Sarah Bridge at sbridge@realfacts.com  or Nick Grotjahn at nickg@realfacts.com. He’ll respond to you quickly, allowing ample time to meet your deadline.

The Latest Trends in Bathroom Remodeling

Written by Landlord Property Management Magazine on . Posted in Blog

ghdfgdfFor landlords, remodeling a bathroom may be a lot different than it would be for a homeowner. After all, you’re not living in the apartment, and the colors and materials you would want may not be good choices for tenants.

Expensive cabinets and granite countertops generally aren’t found in apartments, unless you’re renting in a high-priced area to high-end tenants. Generally, trends for standard bathrooms are leaning more toward stock cabinets and laminate countertops. The colors do matter, though, to draw in the vast majority of tenants and keep them happy with their apartments.

Even with good tenants, the wear and tear on a bathroom can really start to show after a few years. Once a tenant has moved out, you may want to remodel the bathroom before the next tenants get moved in. Consider what’s trendy, but also take a look at some of the timeless, more classic options.

You don’t want the bathroom to look outdated next year, so it’s important to make sure you don’t follow too many trends too closely. Using more timeless options for the majority of the bathroom and offering some trendy accents can help.

For example, it’s much easier – and also less expensive – to change out a light fixture than it is to replace a countertop. Keep the countertop stock, classic, and neutral. If it’s treated properly, you may not have to change it out for a long time.

The light fixture can be trendier, because replacing it to update the bathroom between tenants is easy and won’t cost very much. Along with some new paint, it can really make the bathroom look clean and modern. That can bring in a good tenant, who sees the quality and value that you’re offering in the apartment.

Another concern when you’re remodeling an apartment bathroom is the floor. Tile is lovely, but the grout can get stained and dirty easily, especially when renting to families with children or people who have pets. Tile also breaks and cracks if something heavy is dropped on it, and chipping up a tile to replace it can be difficult and costly. Then there’s the re-grouting, as well.

Instead, consider linoleum. There are many options today where sheet vinyl is concerned, and it has come a long way from where it used to be. Some of the better quality vinyl floors are great-looking and very durable.

No matter what choices you make when remodeling apartment bathrooms, be sure to take trends into account. You want to have a modern rental for your tenants to enjoy, but you also want to make sure the rental stays looking up-to-date for as long as possible.

Following the latest trend too heavily will make the newly remodeled bathroom appear out of touch with current trends in no time. By avoiding most of the trends and using trendy pieces only as accents, you’ll have a great looking apartment bathroom that won’t need extensive remodeling on a frequent basis.


logo_aaoa American Apartment Owners Association | Company Website |

At the American Apartment Owners Association (AAOA), our mission is to serve the interests of landlords, real estate brokers, property managers, real estate owners and apartment building owners nationally.  Visit www.AAOA.com for more information about membership details!

Building Your Dream Team – Being Patient and Waiting out the Perfect Candidate

Written by Landlord Property Management Magazine on . Posted in Blog

istock_000018548762xsmallI’ve recently started with a new company working on a lease up property. This property is still under construction, therefore, I am in the midst of hiring staff and building my team. Like any property manager, I want to build the dream team. The most dynamic and inspiring team that I can. I think we all strive for that. But how many times do we act out of complete desperation? Desperate for an assistant manager to ensure the rent is being posted timely, the late notices are going out, follow up on delinquency calls are being made? Desperate for a maintenance supervisor to provide leadership and guidance to our techs, a maintenance supervisor to be our backbone out in the field, to ensure work orders are not just being completed but properly completed, our shop is going to be stocked and inventoried? I’m just as guilty, I assure you, of hiring out of pure desperation to simply get the spot filled.

But this new company I work for….they really analyze every candidate I bring to them. (I have to admit, at one point last week, I wondered to myself, “How in the world did I even get hired?!?!?”) And while at first it seemed extremely frustrating to feel as though you had found just the right candidate and have them turned down via a second interview, I soon realized the integrity there was in waiting it out. Despite feeling that pang of desperation in needing a full staff on opening day, I realized that waiting it out was the best thing to do because soon thereafter, an even better candidate would arrive in the picture.

While I am still not fully staffed at this point in time, I relish the fact that I have learned this new way of hiring. It was all unbeknownst to me. Taking your time to hire? Why in the world would you do that? This is taking away from my time as a productive property manager! This is not efficient! Well, I assure you, when you have built the dream team because of patience and integrity, you will realize that it is in fact efficient. You won’t be hiring again in a year because it didn’t work out. You’ll have built a team that will provide the best customer service to your residents, vendors, prospects and corporate office. You’ll have built a team that will remain consistent for an extended period of time providing that same consistency your residents enjoy seeing in the staff.

I assure you, the long term benefits of waiting it out, outweigh the short term benefits of simply filling the position. So wait it out, wait for that perfect resume, ensure it’s not just fluff on paper, and build that dream team with a little patience on your part.


Brittney Nelson (1) Brittany Nelson | Company Website | LinkedIn Connect |

With over 10 years of Property Management experience, Brittney has been afforded the opportunity to work at an on site level from Leasing Specialist to a corporate level as a Regional VP. Her passion is being on site serving her residents, empowering her team and finding her prospects their next home. Brittney has a broad range of experience from renovation properties, stabilized properties as well as lease up properties.

Does Projecting a Green Image Really Matter in 2015?

Written by Landlord Property Management Magazine on . Posted in Blog

Grass-house-495x351Green Revolution is no longer just a buzz word. It’s a way of life for many Americans today. While some people still don’t see the value in making a commitment to protect our natural resources and reduce their carbon footprint – others make intentional decisions throughout the day to curb dependence on fossil fuels and replace wasteful behaviors with positive habits.

What does that mean for property managers in the United States?

Property Managers Can Model and Support Sustainable Practice

According to Kelton Global research, the national recycle-rate is 34.5%. Many survey participants said they would recycle more if they had better information about which items can be reclaimed.

Another survey, the 2014 National Waste and Recycling Association survey, shows that one in three Americans aren’t sure how to separate recyclable items into bins and carts properly.

Young adults (18-34) are the least likely group to recycle consistently and the group most interested in improving their efforts. Here are three ways your community can support this rental demographic.

  • Host a community recycling education event, perhaps to coordinate with America Recycles Day, which is scheduled for November 15, 2015.
  • Clearly mark all bins and carts, and place them in easy to access areas around your property.
  • Publish helpful recycling tips and suggestions on your company website, in digital newsletters and via email campaigns or text messages.

(Read more about the survey findings here)

Innovative Technology Solutions

While residents are looking for ways to increase recycling efforts, they also want opportunities to lower utility costs and manage natural resources wisely. Strata research reported in 2013, 64% of young adults in the 18-33 age group said they were willing to pay higher rent rates to live in a green apartment community.

Along with installing low-water toilets, ENERGY-STAR certified appliances and high-performance replacement windows that attract eco-minded apartment seekers, property management technology can also improve your green image.

Leverage your tech tools to reduce paper waste with this tips.

  • Replace printed floor plan brochures with walk-through videos on your company website.
  • Switch to online application and digital lease options.
  • Convert printed owners’ statements to digital format via online portal tools.
  • Archive files in the cloud and not in the file cabinet.
  • Text or email rent reminders in lieu of mailed monthly statements.

Retrofitting, Regulations and Reputation Management

Building energy management strategies are gaining traction across the nation. As the federal government issues more rigorous energy conservation benchmarks, multifamily housing professionals are facing increased regulations from states, municipalities and regional governing bodies.

Many metropolitan areas already have regulations in place that require large multifamily complexes to disclose, rate and benchmark water and electricity usage. Five states – Alaska, Kansas, New York, Maine and South Dakota – have adopted residential disclosure laws.

It’s never to early to prepare for the future. Small property managers and multifamily property owners from states that haven’t yet adopted reporting standards may benefit from familiarizing themselves with benchmarking standards for retrofitting and designing energy-efficient building management plans.

Projecting a green image is relevant in 2015 and will continue to be important as we collectively look for ways to use our natural resources wisely. Multifamily housing professionals who take a proactive approach stand to attract attention from apartment seekers and capture the respect of their peers and colleagues in the process.


appfolio Appfolio | Company Website | LinkedIn Connect |

AppFolio, Inc. develops Property Management Software that helps businesses improve their workflow so they save time and make more money.  Appfolio submits articles & blogs including topics of Resident Retention, Improved Owner Communication, Time Management, and more.

Home Prices Expect Near Double Digit Growth in 2015: Good News or Bad News for Rental Markets?

Written by Landlord Property Management Magazine on . Posted in Blog

173931950It’s 2015 – do you know where your Millennials are? Watching the movement of this key group of young adults – aged 25-29 – is one of the best ways to get a realistic picture of what’s on the horizon for property managers and the rental market.

Surveys and studies published in 2013 and 2014 showed that Millennials lacked confidence about buying first homes in the near future. Job scarcity, high fuel prices and staggering student debt pushed young adults toward rental housing. However, things may be looking up for this cohort.

What’s Driving the Stronger Confidence?

Spiraling gas prices and strengthened conditions in the technology and energy sectors may boost confidence to pursue homeownership.

Job stability plays an integral role in bolstering consumer confidence levels. CoreLogic’s 2015 Housing Outlook Report reveals Millennials outpaced other groups with a 3 percent job growth increase in 2014 – a full percentage point above the national average.

Although Midwest markets are typically slower to recover than metropolitan areas on both coasts, Missouri was the first state to boast a statewide average gas price below $2 – hitting $1.98 per gallon on December 26th, 2014. AAA estimated that consumers reap daily savings of $450 million compared to the first half of 2014, according to USA Today reporter Aamer Madhani.

Improvements in economic conditions prompted CoreLogic to predict US home sales will increase by 9% in 2015. Does this mean challenging times ahead for property managers?

Can Property Managers Capitalize on Millennial Confidence?

There’s plenty of good news for real estate investors.

  • With oil prices falling more than $53 per barrel in 2014, property managers should see lower overhead costs associated with transportation, heating and cooling and maintenance supplies.
  • Price-to-rent ratios remain high, even with mortgage rates hovering around 4 percent.
  • High-end housing inventory in many markets is still tight.
  • Low fuel prices translate into higher discretionary spending levels for many consumers.
  • Job growth increases boost confidence.

Proactive Management is the Key to Capitalizing on Economic Improvements

The best way to meet a challenge is head on. Proactive management strategies should include fostering long-term relationships with Millennials as the US economy continues to improve. Here are a few examples to get your started.

Invest wisely. Top US markets will see stronger growth in low-end housing than higher priced inventory. Investing discretionary dollars in upgrades and amenity improvements will position your property to attract more interest and higher caliber residents.

Monitor your competition. Closely monitoring competitive pricing tiers in your community allows you to adjust rent levels to accurately reflect your inventory and price point expectations.

Engage your prospects on their terms. Millennials account for roughly a third of the US population and will most likely impact the way property managers do business for decades. Stay abreast of emerging trends and research that reveals what young adults expect.

Respect expectations. Deploy technology to improve confidence and convenience for residents. Add digital on-the-move leasing applications and online portals that support 24/7 access to maintenance teams to your line of resident services.

Good News or Bad News for Property Managers?

The US economy isn’t in full recovery yet. Some markets are thriving, while other regional pockets are still struggling.

Recent improvements in economic conditions signal better days are ahead. How well your company responds to near double digit growth in housing sales really depends on your willingness to watch key target groups in your community.


appfolio Appfolio | Company Website | LinkedIn Connect |

AppFolio, Inc. develops Property Management Software that helps businesses improve their workflow so they save time and make more money. Appfolio submits articles & blogs including topics of Resident Retention, Improved Owner Communication, Time Management, and more.

 

Tenants from Hell — Because we all hear about them

Written by Landlord Property Management Magazine on . Posted in Blog

21374_stress-au-travail-e1346859192602Ever had a tenant from hell? If you haven’t been graced with a truly bad tenant, you should count yourself among the very lucky. Many landlords have seen their share of awful tenants. Learning how to avoid them can be difficult especially if you don’t know what to look for. Here are some guidelines for avoiding and dealing with tenants from hell.

Tenant from Hell Stories

The Internet is full of tenant from hell stories. Whether you’re dealing with a hoarder tenant, a tenant who not only hasn’t paid the rent but who is also a stripper with plugged up bathroom pipes, or a tenant who has passed out with a sexual device after flooding the room the first day, it’s better that you don’t deal with bad tenants from the start rather than put up with these problems. So, how do you keep from having nightmare tenants? Here are some ideas to keep sanity in your life — and on your property.

Have Written Rules

If you have your policies written up, it’s easy to point to your rules for what is allowed versus what isn’t. By having your tenants sign a contract stating that they agree to the policies you’ve set forth, there is no question what is acceptable and what isn’t. You also have a legal leg to stand on if you need to evict or sue the tenant for damages.

Screen Your Tenants Up Front

Before you accidently bring in the tenant from hell, the first thing you need to do is screen your prospective tenants. Don’t accept sob stories — a bad tenant is unlikely to change his or her ways. Screen your tenants carefully. Run background and credit checks. Contact all previous landlords and references. Verify their employment and their income. If you can, visit them in their current home so that you can see how they live now. You’ll hopefully be able to discover whether they’re a hoarder, drug manufacturer, or have other undesirable problems.

Be Hard-Nosed

Even if you’re sympathetic, you need to keep in mind that tenants from hell will take advantage of any weakness on your part. That means that if you let their tales of woe affect you, they will continue to behave the same way — or worse. If they’re late on paying the rent and you charge a late fee, don’t wave the late fee. If you don’t allow smoking and someone is smoking, you need to charge them appropriately, or even evict them for the damages. Whatever they’re doing — or not doing — you need to have them correct it immediately or they will continue to take advantage of you.

Don’t Be Afraid to Evict — or Offer Them Money to Leave

If the person is that bad of a tenant and have violated the rules, evict them as soon as possible. Hire a good lawyer if you need to. If they have not violated rules but are still a pain, you can offer them money to leave. In this way, you get rid of a problem and they can cause someone else a headache. It may seem counterintuitive, but often making the problem go away with cash is better and cheaper than the cost of stress, damages, and your own therapy sessions.

Offer Help

If your tenant has a real problem and you don’t want to be hard-nosed, you can also offer to help them by referring them to counseling, whether it’s financial help, addiction help, or mental health counseling for problems such as hoarding. (Hoarding is a mental disease and not just an undesirable behavior). But don’t expect miracles. It takes a while for the person to change, and they will only change when they decide they’re ready to do so.

Remember that no matter how colorful or how weird your tenants from hell may be, you need to be aware that you are in charge and you don’t have to put up with their behavior. By screening and not allowing the behavior to continue, you can avoid being a victim of tenants from hell.


logo_aaoa American Apartment Owners Association | Company Website |

At the American Apartment Owners Association (AAOA), our mission is to serve the interests of landlords, real estate brokers, property managers, real estate owners and apartment building owners nationally.  Visit www.AAOA.com for more information about membership details!

6 Mistakes That Make Good Landlords End Up With Bad Tenants

Written by Landlord Property Management Magazine on . Posted in Blog

messBad tenants are bad news!

Renting to a person who refuses to pay their rent can cost a landlord thousands of dollars. A destructive tenant may end up damaging your property and racking up huge repair bills. Other nightmare renters can fight eviction, and the worst case is a renter who harms other tenants or even you!

A landlord’s lackadaisical approach to tenant selection can end up biting him in the end. Here are 6 common mistakes that cause good landlords to end up with bad tenants:

#1: Failing to run proper tenant screening checks. This error can cause you to miss big red flags that would steer you away from certain rental applicants. A tenant criminal background check can show you the applicant’s potential for being dangerous or destructive. A tenant screening credit check could alert you to a person’s problems with huge debt, or overall financial instability. Eviction records can return evidence of a person’s past evictions. All of this information is important in determining whether or not you want this applicant as a renter. Foregoing tenant screening opens the door to bad tenants who would otherwise have been weeded out.

#2: Not taking the time to examine the tenant screening checks thoroughly. Simply ordering the proper tenant screening background checks is not enough. A smart landlord must review them closely, and take note of any information that could point to an applicant who would not pay his bills, be destructive, or dangerous. Look for bad money management, overwhelming debt, and recent criminal convictions. If any of these are present, ask questions before you rent to the person.

#3: Not taking quick action. Giving bad tenants a chance to turn it around when you should be beginning eviction procedures is a costly mistake. Currently 35% of U.S. households are renting. The quicker you can get a bad tenant out, the faster you can find a good tenant to move in. Giving the tenant ‘just one more chance’ or allowing them to skip paying the full amount of rent only delays the inevitable. This mistake will stick you with a rental property that isn’t making you (and may even be costing you) money.

Bottom line, if the tenant isn’t following the lease agreement, begin the eviction process.

#4: Skipping the process of verifying their employment.This may be a shocker, but people lie. That is why landlords must verify ALL employment. Not doing so puts you in the tenuous position of renting to an applicant who does not make enough money to pay the rent, or is unemployed altogether. While verifying employment will not guarantee the person will pay his rent, it will go along way to ensure it.

#5: Being lenient on enforcing the lease. Allowing a little leeway here and there may seem like the nice thing to do, but it makes you look like you are not sticking to your guns. Tenants will begin to expect this behavior, and take advantage. The lease agreement was created for a reason! Avoid the temptation of bending the rules, even every now and then.

#6: Having ‘ants in your pants’. Sure, every landlord dreads the thoughts of a property sitting empty. Better, however, to take an extra month to wait for a solid tenant than to hurry and end up renting to someone who trashes the place or won’t pay their bills. Don’t jump on the first applicant walking through the door, or rush your due diligence. Your bank account-and your blood pressure- will thank you for avoiding the headaches down the road that a rash decision can cause.

While landlords are faced with the responsibility of keeping their properties rented, they also need to remember to take their time, screen the applicants thoroughly, and reach a solid decision. Once the renter is in place, the lease needs to be enforced, and the landlord needs to be fair but firm. These practices will minimize the risk of a good landlord ending up with a bad tenant.


logo_aaoa American Apartment Owners Association | Company Website |

At the American Apartment Owners Association (AAOA), our mission is to serve the interests of landlords, real estate brokers, property managers, real estate owners and apartment building owners nationally. Visit www.AAOA.com for more information about membership details!