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Why You Need To Talk To Your Tenants About Renter’s Insurance

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Renter’s Insurance – Why It’s Important

why tenants need renter's insuranceIronically it’s not just tenants that don’t understand renter’s insurance but it’s also landlords as well. Here’s why it’s important and here’s also what you need to know as a landlord.

Your insurance covers your property.

Or at least it should if you’re properly insured!

Depending on the type or amount of insurance this covers damage to the property through issues such as fire, flooding, sewer backups, rental income loss and more.

This helps you repair or rebuild your property if one of these issues does occur or provides you potential settlements if you prefer not to move forward with the work or if you wish to do it yourself.

Again the important point of this is it depends on the type of coverages you have. If you aren’t specifically covered for flooding for instance the insurance companies won’t cover you if there is flood damage.

If you don’t have coverage for loss of rental income, you won’t be covered for those losses, so it’s very important to ensure you’re properly insured to protect YOURSELF!

And that’s the important point, your insurance covers you, it doesn’t cover the tenants property and it also doesn’t cover the tenant if they are negligent and were the ones that potentially started a fire.

That is why it’s important the tenant themselves have renter’s insurance so they can cover the potential loss of their personal possessions.

Addressing Renter’s Insurance with Tenants

Now many landlords ask me “When or how do I talk to tenants about their insurance?”

Ideally this is done when you’re going through your lease with the tenant, but it can also be done as a courtesy during showings.

Many landlords make having renter’s insurance a term of the lease. This can be a great way to ensure they are adequately protected (as well as yourself) in case they do cause a problem such as a fire or significant damage due to negligence.

The challenge is depending on your local laws  you may not be able to enforce this, so as always learn your local laws and regulations!

I typically walk tenants through renter’s insurance during the lease signing by explaining to them how insurance works and the conversation typically goes like this.

” I just want to talk about insurance with you before we go any further. I have insurance on my property, but my insurance only covers my property. That includes the building itself, the appliances and everything attached or part of the property like doors, cupboards sheds and garages.”

“It doesn’t cover your belongings, your expensive stereo or TV, your computer, your clothes or any of your other possessions. That’s why you need your own renter’s insurance!”

It will cover any losses you might incur, it could cover any costs you might run into if you have to stay somewhere else if there was a fire or flooding and often it will even replace any goods or clothing you’ve lost.”

“And most important, it’s usually quite inexpensive for tenants as it doesn’t cover the building! Because of this I’d recommend acquiring your own insurance a priority right away.”

By this point the tenants usually understand how important it is, but it may still require following up once they have settled in. Just to make sure they actually do follow up!

What Tenants May Need From You To Get Renter’s Insurance

Depending on who the insurer is, often your tenant will now need you to answer some additional questions as well.

This can include the size of the space they are renting, the type of construction of the property, the type of heating, whether there are other attached units (ie up down suites, or whether it’s a condo/duplex) and possibly additional details.

To make providing this easier, you may want to include this information with any tenant packages you provide, and/or you may want to keep the information handy in your property files just for this type of occasion.

You’ve likely already been required to provide this to your own insurance company so it shouldn’t be hard to pull together.

Having an insurance conversation with your tenants can go a long ways towards avoiding a particularly unpleasant conversation if you ever do have major issues as well as pointing tenants towards a bit more peace of mind in their lives.

If you have some thoughts about tenant insurance and how you deal with it, leave me a comment below!

 

What’s The Best Way To Screen Tenants?

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Is There A Best Way To Screen Tenants?

Best way to screen tenantsMany first time visitors here are looking for the best way to screen tenants. The problem is, there is no single best way.

It really requires a multitude of strategies to ensure you’re screening as well as possible.

There is no single question you can ask, a certain number they need to have for a credit score or a the ultimate reference. It’s a combination of all of these plus a bit of your gut.

The real challenge that comes with this is that it’s also a matter of consistency.

If you have a multitude of requirements and a broad range of questions, hoops and steps that take you from a vacant property to a fully rented property it becomes incredibly important to create a process.

A process you can repeat to ensure you’re using the best way to screen tenants possible rather than a haphazard approach where you could miss steps.

How I Can Help You Screen Tenants

Fortunately I can help a little in that department, or a lot depending on your needs.

best ways to screen tenantsAt the very least I’d suggest you grab my list of 7 interview questions you need to ask prospective tenants. That will help you a little by providing several basic questions that you can consistently ask tenants during the phone interview stage of your vacancy.

By asking these questions before you even show your vacant unit you’ll save yourself an excessive amount of potentially wasted time by weeding out tenants who will never qualify for your property. Or who are simply testing the waters and aren’t even serious.

On top of that by creating a systematic process that you repeat over and over as a best way to screen tenants for your landlord business, you’ll be able to protect yourself from potential discrimination complaints.

Would You Like A System For Screening Tenants?

Of course the 7 Questions are just the beginning. They make up just one of the 7 steps required to properly screen a tenant.

These steps include

  1. screening with a good rental advertisement
  2. screening with an initial phone interview (using the 7 questions)
  3. screening with an in person interview at the property
  4. using a solid application form
  5. calling of work references
  6. calling of landlord references
  7. and finally a credit/criminal check

Then capping all of this off with how you feel about the tenant. After all if you’re in the business of creating good solid homes for tenants long term you do want to rent to someone you like don’t you?

I feel using these steps are the best way to screen tenants and to screen them consistently so that you get the best possible people for your property.

You’re more than welcome to build your own system using this set of steps and off of my original 7 questions.

What If I Built You The System?

Now many astute landlords will look at that information and realize it could take many many hours to create their own system. And it would be a lot of work.

Wouldn’t it be far easier to have it already done for me? In a format where I could download the steps, maybe learn the best way to write my ads so they can do soem screening for me?

Maybe even providing additional best practices and questions to ask references and former landlords?

How about if it also showed you where and how to get credit checks and criminal checks and then even told you how to read them?

How much time would that save you and how much easier would it make your life?

Well tada, I’ve done this for you!

It’s part of my How To Screen Tenants Like An Educated Landlord Course and I feel the information it contains should be mandatory for landlords to know.

It’s based on the actual systems and processes I’ve used over my career as a successful landlord and includes the best way to screen tenants that I know of.

The art of screening tenants is one of the important skills a landlord can possibly have. Choosing the wrong tenant can range from being a minor headache to costing you months of lost rent and excessive legal fees in order to evict a bad tenant.

With the average eviction costing a landlord over $3,000 in lost rent, lost time and vacancies this $47 investment saves you money the first time you use it.

How To Purchase The Educated Landlord Screening Course

If you’re interested in the course so you too can avoid choosing the wrong tenants or simply tenants who will be a poor fit for your property you can purchase this online training through the following link.

How To Screen Tenants Like an Educated Landlord

If you’re still not convinced you need this course, let me ask you a few questions.

What would learning how to write an ad that fills your property faster saving you extended vacancies be worth to you? With average rents around $1,000 one month of additional vacancy costs you at least $1,000 not including any utilities you cover out of pocket along with other costs. That’s why I include ad writing as part 1 of the course.

How much does your time cost if you go to show your vacant unit to someone who will never take it? With an average showing taking 30 minutes to show the property plus driving time every “wasted showing” costs you an hour of time. What’s your hour worth? What if this happens three or four times or even more? That’s why lesson two goes into detail about the 7 Questions and how you can use them to avoid showing the property to time wasters saving you multiple hours of your precious time.

Do you know the most common scam tenants use to get good references handed out? I do, which is why in lesson four I explain what to do to avoid those scams, how to verify their information and why their current landlord may be the worst reference possible! Knowing this can help you avoid soem of the worst possible tenants, the professional tenants who use their knowledge of the systems and laws to get into your property for months at a time without having to pay any rent.

What do you do if you can’t find a qualified tenant? The wrong answer is to settle and the second wrong answer is to tell the applicants who didn’t qualify that they aren’t qualified! In section five I break down what to do if you don’t find qualified tenants and how to let the unsuccessful applicants down easy and so they don’t come after you for discrimination charges which is extremely important!

Finally, do you know where to get credit or criminal checks done and how to read them? Many landlords don’t know where to start with this and then even if they do they have no idea how to read or understand the reports once they get them. I explain a couple places to get credit checks done along with explaining what to look for and how to read them.

The best way to screen tenants - the Educated Landlord Screening Course

If you’d like to learn all the right steps to screen tenants along with what to watch out for to avoid the wrong tenants you’ll want to sign up today and get educated.

Again here’s that link, How To Screen Tenants Like an Educated Landlord

Remember, it’s all online with multiple downloads you even if you’re fully rented right now you can sign up, take the course at your own pace and be ready and primed for your next vacancy. You’ll even have all the skills to pre-write your ad for your next vacancy!

 

Know other landlords who have recently had problem tenants? Forward this article to them so they can avoid future problems!

Landlord Lessons

Be a Fair Landlord, But a Firm Landlord

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It’s important to be a fair landlord with your tenants, but many times this opens the door for a tenant to take advantage of a landlord who is too nice, so you also need to know when to be a firm landlord at times!

A firm landlord know when to draw a lineI was reminded of this last night as I was on a consulting call with a very nice landlord who was being too nice!

Now I’m not saying it’s a bad thing to be nice, you just need to know that there are people who will take advantage of this niceness, so you need to know when and where to draw the line in the sand and be a firm landlord. And trust me, it’s not restricted to just landlording, there are people who will simply try to take advantage of you anywhere!!

If you find yourself often on the short end of dealing with tenants because you are a nice person, here’s a quick tip to turn you into a firm landlord without confrontation.

Don’t let the tenants know you’re the owner!

Yep, only let them know you are the property manager (which is true, you just manage it for yourself).

Now if the tenants try to take advantage of a situation you can simply reply, “Oh, I’m sorry I can’t make that decision, I’ll have to check with the owner”.

This gives you time to make a better decision rather than being pressured into a bad decision on the spot.

And yes, you can use this even if they know you are the owner, just change it to something like “I’m not sure if that will work, let me look into it and get back to you. Again buying you time to make a smart decision rather than a situation where you are taken advantage of.

What are your thoughts, are you a fair landlord? Or a firm landlord? Do tenants take advantage of you being to nice? Leave me a comment below as I’d like to hear your thoughts and whether you think this could help you!

 

Why You Need A Custom Rent Increase Letter For Your Tenant

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Rent increase letter for raising your rentIf you plan on sending a rent increase letter to a tenant you need to understand how this can play out.

If you have a standard form letter announcing a rent increase you may get your monthly bump in cash flow, but at the expense of creating a long term relationship.  And long term relationships are one of the secrets of stress free landlording!

Think about it, when you get a form letter in the mail does it bring a smile to your face, or is it so impersonal you simply ignore it or worse build up negative feelings. I’m guessing even if you do ignore it deep down your subconscious is still feeling like you’re just another number in the system.

What if instead of a form letter you instead received a personalized letter. One that addresses you, your potential concerns and perhaps doesn’t have your name in a different font! How would that make you feel?

Well that’s the reason for creating a customized rent increase letter for any tenants facing a potential rent increase. But it’s not just a matter of customizing it.

You also need to position it! Now I go much more in depth about positioning in a previous article about raising rents and you can go check it out here, Raising Your Rents Without Raising The Roof (I also provide a sample rent increase letter you can look at).

The quick lesson about positioning is you have to make sure your tenants know you value them and that you’re not just randomly raising rents, but rather that you have expenses to cover as well.

Expenses like ever increasing property taxes, skyrocketing insurance rates and bank fee after bank fee. While they’re not a huge deal if they trickle in, after a couple years they can put a significant dent in your cash flow, and you’re already taking the risk of being a landlord so these costs need to be passed onto the tenants.

Just to be clear, I’m not talking about doubling your rents either. There is a fair and positive way to increase your rents and you need to understand that it starts with your rent increase letter.

If you haven’t gone to take a look at that earlier article yet I’d suggest you go take a look and get started on your rent increase letter sooner rather than later.

One last thing, make sure you understand local rules about rent increases. This can include how much you may be allowed to raise rents, how often you can raise rents and how much notice is required for a rent increase.

If you have any questions or feedback, leave me a comment below!

 

How to Avoid Fair Housing Violations in Tenant Screening

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In an effort to provide more education information or landlords I’ve been busy creating some partnerships with other like minded organizations and I’m excited to share the first article from OneRent, a property management and rental services company from California.

They’ve been helpful enough to provide an article covering the US Fair Housing rules, hopefully you find it helpful and can share it with other landlords in your circle to keep them educated as well.

Also, if you find the information helpful be sure to leave a comment for them down below!

The Federal Fair Housing Acts (42 U.S. Code § §3601-3619, 3631) prohibit discrimination
on the basis of race, religion, national origin, gender, age, familial status and physical or
mental disability (including recovering alcoholics and people with a past drug addiction).
Many states and cities also prohibit discrimination based upon marital status or sexual
orientation. For this reason, it’s best to consider those factors protected as well, just to
be on the safe side. With that understanding, here’s how to avoid fair housing violations
in tenant screening.

First of all, make sure everyone on your staff treats anybody who responds to one of
your vacancy advertisements in the exact same fashion. To ensure this, establish a
procedure by which the interview process is conducted and insist upon it being followed
to the letter—each and every time. To standardize this procedure, prepare a checklist of
questions and make sure applicants are never — under any circumstances — asked
questions relating to the protected parameters above.

Yes, as a property owner, it is absolutely your right to establish a set of criteria by which
people can be qualified to rent one of your places, as long as none of the above issues
are included among them. To ensure you’re always in compliance, establish a written
document listing the criteria by which you measure the suitability of a prospective
tenant. Insist your rental agents become intimately familiar with them and follow them
religiously.

Legally, you are within your rights to decline to rent to individuals with bad credit
histories, income you can reasonably regard as insufficient to pay the rent, or past
behavior — such as property damage or consistently late rent payments. These traits
can be plausibly established as making someone a bad financial risk.

While you are free to include probing questions to elicit information regarding any of
those risks, your rental application should be completely impartial regarding any of the
protected factors. In other words, it’s OK to ask for financial information, job history,
criminal record, previous rental experience and the like. But you must stay away from
anything having to do with the protected terms. To keep everyone honest in this regard,
Federal agents randomly apply for rentals to ensure the law is being followed. Fines can
be in the five-figure range, so make sure your people know it is not OK to exhibit
discriminatory behavior—not even once.

It is also a violation to “steer” certain people into certain properties, or certain parts of a building. Whenever an applicant asks about any other openings you may have, you are
obligated to tell them about every vacancy in your portfolio, even if you think some may
be beyond their reach financially. Never assume this is the case, as you could come off
as being discriminatory and get into trouble. All you can do is take their application and
process it according to the written qualifying criteria you’ve established. If they meet all
of the requirements, they get the place—it’s that simple.

With all of the above in mind, the absolute best way to avoid Fair Housing violations in
tenant screening is to be unyieldingly consistent in your dealings with prospects. This
includes extending gestures such as offering an older person, a disabled individual, or a
single mother a break on the rent or the security deposit without making similar offers
to all other applicants.

Everyone must meet the same standards—period.

You also want to keep in mind those whom you employ can get you held liable for their
discriminatory actions. As the landlord, you’re expected to set an example and see to it
everyone lives up to them. Always make sure all applicants get the same information
about every place you have open and keep your written criteria close at hand should it
ever be questioned.

If you and everyone on your staff always do this, you should be OK.

Under no circumstances should the information conveyed in this article be considered
legal advice. If you have specific questions in this area, consult a real estate attorney
familiar with the Fair Housing regulations.

Onerent is a rental leasing and management service for the modern owner and renter, managing over 1,000 properties across the San Francisco Bay Area, and Greater Seattle. 

For more real estate investing tips visit the Build with Onerent real estate blog

Should (and can you) Fire A Tenant?

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Should you fire a tenantThere’s an old Polish proverb that says “not my circus, not my monkeys”. If you understand this proverb, you know you have to fire a tenant in certain situations.

If you don’t, let me break it down.

What the original creator of this proverb was trying to say (at least in my opinion) was that if it’s someone else’s problem why are you dealing with it?

Their problem, their issues, until they become your issues.

Then it may be firing time.

If a tenant is repeatedly late with rent because they get paid late their circus has dragged you in as part of a sideshow. Try paying the bank late repeatedly, it doesn’t fly and your circus could get shut down.

If your tenant refuses to maintain the property, the grass is two feet high and full of weeds or the snow on the sidewalk to a foot deep it’s not them that gets the ticket from by-law, it’s the property owner. You’ve been dragged into another sideshow.

If you find a tenant is repeatedly causing you grief, stress or is extremely demanding, you need to fire them and find someone new, otherwise you become one of the monkeys in the circus.

So, Can You Fire A Tenant?

I know I can where I live, but it’s because I understand my local landlord tenant laws. My secret is fixed term leases.

Under my local Residential Tenancy Laws I don’t have to renew a lease if I don’t want to.

My secret involves starting tenants with six month leases or possibly year long leases and renewing at the end of the term, well renewing if I enjoy the circus. If not, Hasta la vista baby.

I can’t stress enough that is applicable to where I live. It’s important for you to understand your local laws.

What flies in Alberta (where I am) doesn’t fly in New York City. That doesn’t mean you may not have options, but you really need to know them before the emcee starts introducing the monkeys because after the shows starts many of the rules may not apply.

Keeping It Short

There, a short post, enjoy and share, provide me some feedback and let me know if you ever fired a tenant or let me know if I’m simply out to lunch.

So, Your Tenants Late with Rent…

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Dealing With Late Paying Tenants

late rent payments - tenants late with rent

I received an email recently asking me what steps a landlord should take when a tenants late with rent and I was kind of taken aback.

You see, this is one of those issues that is so easy once you’ve gone through it a couple hundred times. The problem for me is it was so long ago, I’d forgotten what I do is a learned response.

And I learned it so long ago that when a tenants late with rent, I simply take action.

So, rather than making you learn it on your own, I’ll just go ahead and break down the steps you need to follow if this occurs to you, but before I get there,  I want to talk about the challenges of evicting a tenant.

It’s these challenges that create the need for your actions to follow a specific process on your end as a landlord, so let’s dive in.

The Challenge of Evicting a Tenant

Just about every jurisdiction has a specific process for evicting tenants. Sometimes it involves a three day notice to quit, other times a 14 day notice to vacate. Some places require a court application to make it official and others have tribunals.

The one consistent challenge this represents for landlords is you need to prove your tenant has breached your lease and/or that you have a valid reason to evict them.

In my experience those valid reasons for an eviction tend to revolve around three main issues,

  • Non-payment of rent
  • Damage to the property
  • Conflicts with other tenants

You would think any of these would be easy enough to prove, but when you end up in a hearing, landlords often find themselves ill prepared compared to the excuses or lies that a nefarious tenant may be able to come up with when faced with eviction.

I’ve had tenants late with rent lie about paying cash and not receiving receipts, I’ve had tenants try to explain the gaping hole in the drywall was there when they moved in and I’ve had tenants explain they had no idea there were conflicts.

So what’s a landlord to do? Especially when a tenant is outright lying?

Preparing For Evictions Before They Are Necessary

Now, the point of this article is about what to do when a tenant’s late with rent. It could just as easily apply to damage to your property being damaged, conflicts between tenants or any other reasons that could lead to requiring an eviction of a tenant.

The important sub message for you is that every issue like this you need to understand could be the first step to building up a case for eviction. Assume the worst, and hope for the best!

That’s why the first step you need to take is to create paper trails you can refer back to if the situation doesn’t correct itself and goes further out of control.

When I’m consulting with landlords about evicting tenants I continually harp on documenting everything. It’s not just a matter of talking with them, you need to document it as well.

That’s part one of preparing, but just because you’ve documented it doesn’t end there.

Part two is making sure the tenant receives copies of your notices/documentation so you have a complete paper trail and takes the ability away from them to say they weren’t aware.

Creating a Complete Paper Trail

Tenants late with rent so create a papertrailSo what is a complete paper trail? It’s evidence that shows everything along the way, whether it’s the written notice you provide informing tenants rent is late, to complete documentation showing the condition of the property when they moved in all the way to dates and instances of previous conflict issues with the tenants.

Hopefully this is making sense, but to clarify even more let’s walk through an example.

It’s the 1st of the month and Joe your tenants late with rent. Now maybe he usually sends electronic transfers later on the 1st, so you sit back and eagerly check your email on the 2nd, again no money!

Tenants Late With Rent

Step 1

I’d suggest calling and/or texting the tenant immediately advising them they haven’t paid rent for the current month yet.
It could have been an honest mistake, or it could be a sign of pending trouble. You can often tell by how easy it is to initially contact them. Although sometimes you may simply get strung along as well if you do reach them first time, so be diligent and stay on top of this.

If you get paid great, you still want to move onto step 2, but at least the pressure is off.

Step 2

If you were paid, great, but you’re not done yet.

Follow up with a written letter for the tenant informing them that you understand late payments can happen, but this can only be a one off type situation as the rent payment is required to cover your bills for the property like a mortgage (you may need to ad-lib here a bit depending on your situation).

If you weren’t paid, you want to create a more stern letter for the tenant explaining all of this.

In both cases you need to refer to the conversation and/or text correspondence that you previously had about this issue. This is a matter of building up your evidence and paper trail.

I’d suggest bringing up potential repercussions if it’s not dealt with immediately and what may happen if the situation isn’t corrected (eviction, extra costs to the tenant and more, but all without being threatening, just informative).

Step 3

***UPDATE – Thanks to some great feedback from one of our readers, who also happens to be a Constable located in Massachusetts, he’s recommended the following tips regarding service of paperwork;

1) Certified mail does not need to be accepted and won’t be returned immediately. First class mail cannot be proven to have been delivered. Worse still is there is no proof what was delivered.  Tenants can claim that they received an empty envelope or one containing a blank piece of paper.

2) Proof of service.  I am an officer of the court. As such my return of service is accepted by the court as prima facie evidence that service was effectuated as indicated. Also I am a disinterested person and have no involvement in the action.

I would strongly suggest that whenever possible a Constable, deputy sheriff or Marshall should be engaged to serve this process, ensuring  that the case  can move forward with little delay. – Constable MP Weisberg

Now rules and variations do occur depending on where you are located, so make sure you understand them locally. Service by a process server, Constable or Sheriff may be mandatory, or simply advisable depending on your unique circumstance. Thanks for adding your voice to this MP and thanks for helping other landlords!

It’s important that you hand deliver this if possible. If it’s not, you want to create some potential trail of delivery and receipt.

If you’re hand delivering make note of the date and time and follow up with a text and/or email referring to the letter you dropped off. A frequent tenant response in hearing is they never received any notice about the problem, this solves that.

If you are not able to hand deliver you can send it via registered mail or courier which provides a tracking process.

If neither of these are possible as the tenant is trying to avoid you, then your option may be posting the notice on the property.

The challenge with this is it’s still hard to prove they received it, so here’s some additional steps.

Make sure you post it on every entrance to their unit. If it’s an apartment, it’s easy, just post it across the door and the door frame so they can’t miss it as they go in or out.

If it’s a house with a front and back door, post a copy on the front and back door, again across the frame and door. If it’s a house with a garage, post it on the two doors and the garage door.

Perhaps most importantly whatever the circumstance, once it’s posted then make sure you take a photo with some sort of date and time stamp to verify when you took the picture(s), just in case you need to prove it later.

Just as a warning, be aware some pro-tenant jurisdictions may claim this is tenant harassment or potentially slanderous if it’s posted for everyone to see. Always be aware of local rules and laws and make sure you can back up any claims that may be indicated to protect yourself.

Step 4

Follow up!

Once you’ve talked to the tenant, left them notice or documentation about the issue, follow up with an additional text, email or follow up phone call which you also document.

I’ve run into numerous situations where tenants have confirmed via text they received the notice, then in a hearing deny it and their entire claims fall apart due to the text evidence showing they are lying.

The final proof ends up often being your follow up, so don’t take a short cut and miss that final step as often it can be the deciding factor.

Final Thoughts

One way to stand out if you do ever end up in an eviction situation is to be a professional. If your tenants late with rent it requires more than a phone call or text to be a professional. You need to do the extra work!

As is often the case it comes down to treating this like a business and doing your job professionally. If you’re in a hearing and you come across as a professional who has all the evidence, is following all the rules and are going through all the proper processes evictions become much easier.

Now it’s your turn for a final thought.

If you’ve ever evicted a tenant, tell me what the experience was like below in the comment section. If you think this article would have helped you I’d like to hear from you even more!