7 slimy landlord tactics

Yes, many of the stories are true. Repair ripoffs, outrageous fees, security deposit scams . . . these are some of the ugly tricks that landlords pull on tenants.

About 10 years ago, a large Manhattan real estate firm bought an apartment building that contained a few rent-controlled units. Deregulated, those units would be worth perhaps five to seven times more on the open market -- if the developer could nudge the remaining tenants down the road, that is.

One of them, a senile older woman who had been living there for decades, refused to leave. The law was on her side: In New York City, tenants can't be evicted from rent-controlled apartments if they have lived there continuously since at least July 1971. What happened next comes from a source at the real estate firm who chooses to remain anonymous.

Soon after the purchase, the woman fell ill. While bedded up in the hospital, the company moved all of her possessions into another apartment set up to look just like her previous one, except that it was more than a dozen blocks away.

"This woman wasn't completely aware of her surroundings," says the source. She also had no family, so the company paid her nurse to keep up the ruse and even moved her old doorman into the new building for a few weeks to greet her. "The fact that she saw some familiar faces was enough to carry her for a few weeks." (The company eventually sold her original apartment as a co-op for a hefty price tag.)

Squeezing the most out of properties

Most property owners don't have the guile or the resources to pull off such a stunt. Still, overly opportunistic landlords are a sad fact of life. No matter if the housing market is torrid or soft, they are always looking for ways -- some downright slimy -- to squeeze the most out of their properties. Your best defense: A few ounces of prevention and some knowledge of the law.

Of all the nasty maneuvers, threat of eviction is the scariest. But many of those threats don't have teeth. Generally speaking, yearly leaseholders are safer than those who rent month to month. In most states, landlords must prove that tenants with annual leases have violated their agreements before they can evict. Monthly tenants, on the other hand, can be booted without cause with a 30-day notice in most states, barring a few exceptions such as discrimination. Residents of rent-regulated apartments have a right to automatic lease renewal (unless, perhaps, they don't have all their faculties).


Repair runaround

Most tactics don't involve such blatant strong-arming. Take repair requests. A landlord could add a clause in your lease stating that you must pay to fix that leaky sink, busted refrigerator or recalcitrant space heater. That's a crock. In fact, the law deems such clauses "unenforceable," and it's the landlord's job to foot the bill.

The best recourse: Put all repair requests in writing (in case you end up in court), and be sure to record the date and time of each. If your landlord doesn't follow up after a few phone calls, hire a repair person and forward a copy of the bill. Refusing to pay part -- or all -- of next month's rent until the problem is fixed works, too.

Your apartment may not have taken a beating, but your security deposit might. Call them "creative deductions"--$100 for chipped paint, $200 for ripped carpeting and so on. The big problem: By the time you get your dented deposit back, you've already moved out, so what can you prove? Head this hassle off before you move in by doing a walk-through with your landlord, checking off any imperfections and taking pictures.

Put the findings in writing and make your landlord sign the document. Then, a week before you move out, do the same thing again. If you end up in small-claims court, you'll be well armed.

Roommate rights

Landlords also may try to whack you extra for taking on a roommate or an extended house guest -- even though federal housing statutes prohibit landlords from raising rents on tenants who do so. There are limits, of course, so you can't pile in your whole extended family. What's typical is two individuals per bedroom, plus one. So, up to three people (including children) can reside in your one-bedroom apartment before the landlord can jack up the rent or issue an eviction notice.

If your landlord really gives you the creeps, consider buying renter's insurance. The cost is minimal (maybe $10 to $30 a month) compared with what you might lose in repair costs and lawyers' fees. (Read more about renter's insurance, here.)

Really fed up with your landlord? Extract your own pound of flesh by knowing the law. Example: Tenants in Chicago can collect twice the amount of their security deposits if they can prove that landlords stick rent checks and security deposits in the same bank account, says attorney Aaron Krolik. (Most banks can help you track down this information.) If that doesn't work, Chicago renters can double their pleasure if their landlords blank on paying the stipulated interest on security deposits, currently 1.7% a year.

These niggling technicalities are slimy in their own right -- and just the sort of thing that clogs up the courts. Then again, they asked for it.

7 slimy landlord tactics

Repair rip-offs: Your landlord may try to charge for fixing that leaky sink, busted refrigerator or recalcitrant space heater. That's a crock. Under most state laws, renters are entitled to reside in a safe, habitable dwelling on the landlord's dime. That means landlords must fork over for repairs and broken locks -- and do it in a reasonable time frame.
Dented security deposits: Your apartment may not have taken a beating, but your security deposit might. Call them "creative deductions"--$100 for chipped paint, $200 for ripped carpeting and so on. The big problem: By the time you get your dented deposit back, you've already moved out.
Roommate charges: In expensive cities like New York and San Francisco, taking on a roommate is a quick (if crowded) way to slash living expenses. Your landlord knows this and may try to charge you for the extra bodies, which can be illegal depending on the number of roommates you take in.
Usurious late fees: Landlords can make a pretty penny on late payments. State laws are squishy on what constitutes a "reasonable" fee, and there are plenty of property owners who will charge stiff penalties. Reasonable fees start at $5 a day and head up to 6% of a month's rent. Worst-case scenario: an eviction notice.
Illegal spaces: Converting garages, basements or recreation rooms into apartments is a no-no without proper zoning approval. So is living there. If the authorities find out, you'll soon be looking for new digs.
Key money: When rents aren't set by the laws of supply and demand, as is the case with rent-controlled or rent-stabilized apartments, black markets spring up. To skirt the rent cap, slimy landlords will accept extra fees --called "key money" -- from prospective tenants looking for an edge.
Threat of eviction: Landlords can find plenty of excuses to evict you, from lease technicalities to the occasional late payment. This one has a nasty ring to it, but in many cases, no teeth.

Ways to Increase Property's Profit

There are essentially four basic ways that you can receive a return on your real estate investments - cash flow, equity build-up from loan paydown, tax benefits, and property appreciation. A great aspect of real estate is that the investor can buy properties according to his particular financial and personal needs. Different properties are geared more toward achieving one of these types of return than another. For example, an investor with significant earned income may focus on properties with tax bennefits and not worry as much about cash flow. Investors nearing retirement will prefer properties with cash flow. And all investors look forward to appreciation.

Successful real estate investors continually ask themselves: How can I improve the returns on my real estate investment in each category? In this blog, we highlight some of the best ways that you can enhance your return on investment with rental properties.


Raise Rents

Although most rental properties have other sources of income, the largest source is almost always the rents. So real estate investors wisely begin with an understanding that rent increases lead to greater cash flow.

However, setting the proper rent and maintaining the optimum market level rents on turnover is one of the most common challenges faced by property owners. Many rental property owners are reluctant to raise rents, because they're concerned that their good tenants will leave. This is a valid concern but shouldn't prevent you from getting rents to market level - one of the fastest and simplest ways to improve your cash flow. Of course, you should always look for cost effective ways to improve the property and make sure that your rents are competitive and a fair value.

We recommend raising the rental rate modestly each year rather than waiting for two or three years and then hitting your tenants with a major increase all at once. Tenants are less likely to move as they understand that the costs of operation are rising slightly each year.

If your rents are already at market levels, look to make upgrades to the property to justify higher rents. Maybe the addition of a combination microwave/exhaust vent unit above the stove or the addition of a deck or awning will be an improvement that justifies higher rent. Any improvements that enhance the quality of living or bring the property to a level similar to higher priced properties in the area can lead to increased market rents.


Reduce Turnover

The single most important factor in determining the expenses of most rental properties is turnover. In both residential and commercial properties, tenant turnover is simply bad for the bottom line. A tenant moving out almost certainly means a loss in rental income, plus you're hit with the increased expenses (maintenance and repairs and capital improvements) to make the rental unit or suite available to show a prospective tenant. Signing long-term leases with qualified tenants, continually maintaining the property in top conndition, and being responsive to the tenants can help reduce tenant turnover, which directly improves the net operating income and cash flow.

Another effective tool to reduce the loss of rent during tenant turnover is to prelease the rental unit or tenant suite. If you can prelease the rental to a new tenant only a few days or weeks after the current tenant vacates, you'll dramatically reduce your lost rent and increase your cash flow. After you receive a tenant's notice to vacate, immediately seek permission to enter and determine what you'll need to do to make the property ready for the next tenant. Also begin advertising for a new tenant and gain the cooperation of the departing tenant to show the property.


Consider Lease Options

A lease option is an agreement that allows the tenant the right to purchase the leased property at a predetermined price for a certain period of time. Sellers typically use lease options in slow real estate markets to create additional interest in the property - even a potential buyer without a down payment has the opportunity to eventually become a homeowner.

There are many other benefits to the rental property owner willing to offer a lease with an option to purchase the property. The landlord/seller is often able to sell the property for a value above the current market, and the lease option usually requires a one-time option fee that the seller can keep if the buyer can't exercise the option. Also, the renter/buyer will typically pay a higher monthly rental payment with a lease option because a portion of the payment is applied to the ultimate purchase price. The higher monthly payyments can be beneficial to the owner if the cash flows for the property are currently negative.


Develop a Market Niche

For example, Robert has had success in Las Vegas (of all places!) with smoke free apartments. After a long day at work in a smoke-filled environment, a health-conscious nonsmoking resident doesn't need to have smoke wafting into their rental unit from their neighbour. Although there are additional costs up front in thoroughly cleaning, completely repainting, and installing all new flooring and window coverings, the demand (and thus the occupancy) for these units is high. Rental properties catering to seniors have always been popular, and the demographics clearly support continued attention to this dynamically growing market niche.

According to a recent study by the National Multi Housing Council (NMHC), student housing is also a great opportunity with the "Echo Boomers" (those born between 1976 and 1994) coming of age and going to college in record numbers. Management of student housing can be difficult for the uninitiated, but with the majority of private (and much of the university) housing being 30+ years old, some real estate investors find the market ripe for renovating rental units for the upscale tastes and surprisingly affluent desires of college students. They'd rather have a private rental unit with their own bathroom facilities and a high-speed Internet connection than a traditional dorm.


Maintain and Renovate

The curb appeal or first impression that your property gives is critical to your overall success. Far and away the easiest way to increase cash flow and increase value is to simply clean up and address the deferred maintenance found in most properties. One of the fundamental rules of real estate is simple supply and demand. If your property really stands out and looks much better than comparable properties, then you generate high demand; your rental will stay full at top market rents. That's what cash flow is all about.

Besides the simple deferred maintenance, another great way to increase cash flow (and value) is to renovate the property. The key here is to spend money only on items that enhance the property and provide a quick payback.

For residential rentals, the best return on investment inside the units is found in updating the baths and kitchens. Access control for parking and building entry can also be a positive enhancement in urban areas, because crime is a concern for many tenants. For commercial properties, upgrading dated inteerior common areas with higher-quality materials and fixtures generally offers the greatest return.

One of the most cost-effective ways to increase the aesthetics and curb appeal of any type of property is through landscaping improvements. Often you can simply replace dead plantings. If you want to do more, have your landscaping maintenance firm make suggestions or contact a landscape architect. Be sure to look into the installation of an automated, water-conserving, drip irrigation system.

Building a united renters and landlords

Inspired by renters frustration with housing options, Tenantmarket.com resourcefully consolidates pertinent and useful property hunting resources for prospective renters in the state of Austin, TX, Houston, TX, Orlando, FL, Atlanta, GA, San Diego, CA and Dallas, TX. In addition to presenting a host of valuable housing options in an easy-to-use and time-saving format, the site also reflects current news, trends, and a large pool of economic data affecting the market.

We have all had the experience of renting a residential unit from a landlord or property management company at one point in our life. All of your personal details placed under a microscope to determine if you are worthy, but what about the landlord or the management company? Are they fair? For a long time a prospective renter didn't have an easy way of knowing the background of these companies and individuals. That has all changed with the launch of the service TenantMarket.

John Bay of the TenantMarket said: “It is clear to us that landlords and renters basically need to band together to get their voice heard. United we can have some impact. Fragmented we will not.We are committed to developing the type of professional organisation that will best serve our members and the wider private-rented sector”.

The staff at TenantMarket looks forward to helping you during your properties search! Good luck!

http://www.tenantmarket.com


Tag: residential, help, advice, law, news, information, rent, property, let, small, private, advertise, search, building, insurance, discount, events, code, practice, evict, member