Archive for the 'Tenants' Category

How To Never Evict A Tenant

said on November 4th, 2013 categorized under: Tenants

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Eviction Notice on DoorWhat is the easiest way to never have to evict a tenant from your duplex?

Screen them thoroughly before you let them move in.

If you’re new to rental property ownership, it may seem like a good credit score is enough to prevent getting stiffed on rent. But that’s just the beginning.

According to the Minnesota Multi Housing Association (MMHA), you should write down your screening criteria before you ever take tenant rental applications. This sets an objective set of criteria which a tenant must adhere to, which may be referred to when declining an applicant.

In your written criteria, you should consider including:

  • Credit: If someone doesn’t pay their other bills, what makes you think they’ll pay you? People who don’t pay their credit cards, make their car payments or cover other bills should be avoided.
  • Rental History: Call the applicants previous landlords; not just the last one, but the one before that. If yoCriu choose to use a screening service, ask them to investigate whether a tenant has previously been evicted. After all, the tenant is likely to treat you the same way.
  • Income: It’s clearly a good idea for a prospective tenant to have a job if you expect them to pay you on time.  A good guideline is to require an income of 2.5 to 3.0 times the amount of monthly rent.
  • Criminal Record: You should always check criminal background records everywhere a prospective tenant has lived. Be sure to pay a bit extra to drill down to records on the county-level, which generally include lesser charges of the type that may impact the living environment of your property.

Nobody likes the expense of having a vacant unit. However, taking a little bit of extra time to make sure you get the right tenant may save you more money and heartache in the  long run.

Duplex Owners Should Do One Thing In The Fall

said on September 5th, 2013 categorized under: Tenants

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duplex leaseIf you own a duplex in a city where it snows, early September is a time you should be thinking about your leases.

As in, are all of your tenants under one?

After all, if your tenants are on a month-to-month lease, they can pick up and move in January. Maybe that’s not a bad thing, but I’ve found it pretty tough to find new tenants any time after Halloween.

Remember, a lease is an agreement between multiple parties. There is no rule that it has to be 6 months or one year in length. It can be as long or as short as the parties involved agree to.

Don’t be afraid to sign a tenant to a 7 month lease to insure you don’t incur a vacancy until spring.

After all, they might be happy to be assured they won’t be facing a rent hike or have to move over the winter too.

Duplex Tenant Quality Looking Up

said on July 22nd, 2013 categorized under: Tenants

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tenant improvement

I’m sure it bothered you. (Sarcasm intended.)

Well, now you can say you have. CoreLogic’s recently released Renter Application Risk Report indicates the quality of potential renters has improved in the last year.

Apparently the folks at CoreLogic study these things. In the first quarter of the year, the index rose nationally to 104, up two from last year. They believe a value above 100 indicates improved credit quality among tenant applicants, which suggests there may be less risk of them defaulting on their rent.

Of course, not all parts of the country are equal. Their study found the tenants with the highest index scores, at 111, are in the Northeastern part of the country. And the worst? In the Midwest and South, where scores were 100 and 101.

The report also found that renter traffic has decreased in all property types, in spite of income gains of up to 1 percent made by tenants.

Here’s an interesting statistic. In properties that rent for more than $750, the rent-to-income ratios were as much as 22.9 percent. In other words, tenants are using just less than one-fourth of their monthly income for their rent payment.

This ratio may indicate tenants are stretching their budgets for nicer places to live.

How To Make Your Duplex A Dream Getaway- And Get Paid For It

said on May 22nd, 2013 categorized under: Tenants

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Rent your minneapolis duplex for vacation travellersDo you ever hear about something so often in such a short period of time that before long, you’re pretty sure the universe is trying to tell you something?

That’s the case for me, as a number of clients have recently shared stories of renting their investment properties to non-traditional tenants.

What’s so unusual about their tenants?

They typically don’t stay very long.

While it may be difficult to imagine anybody ever thinking of your duplex as a vacation getaway like a cabin in the Smokies, thanks to web sites like Flipkey.com, Homeaway.com and vrbo.com, it’s now possible. And investors are receiving rents for their furnished properties roughly twice the market average for a traditional tenant.

These tenants range from people looking for a weekend getaway to those who are here for several months on a work assignment.

In exchange for an annual advertising fee (usually starting around $300), these websites allow you to feature a dozen or more photos of your property, describe its amenities, the amount of nightly, weekly or monthly rent, as well as offer a calendar of availability.

To reserve the property, the prospective tenant contacts the owner directly, who may accept payment via credit cards or Paypal. Fees may not only include rent, but a security deposit and cleaning charge has well.

Owners having success with this new way of maximizing cash flow tell me a number of things are critical to ensure success. A property must be:

  • Clean
  • Freshly painted
  • Well staged with quality furnishings and linens.
  • Well photographed. Just like listing a duplex for sale, photos must jump out at online viewers, who are making their decision to stay at the property almost entirely on what they see on the Internet.
  • Well reviewed. While properties new to this program may not yet have reviews, pleasant stays make for better reviews, which ultimately makes the property more appealing to future visitors.

While this appears to be a great way of maximizing return on your investment, it’s important to note owning extended stay rentals does have some down sides. For example, if you’re in a seasonal climate where it snows, bookings may be sparse over the cold winter months. Also, due to the more transient nature of the tenants, you will be faced with cleaning, as well as washing sheets and towels after every guest departs.

Finally, while this may, on the surface, look more like a hotel than a traditional rental property, many cities (including Minneapolis) nonetheless require the property owner to have a valid rental license.

How Duplex Owners Can Feed Their Tenants To The Alligators

said on February 13th, 2013 categorized under: Tenants

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alligators in duplex sewersHow much notice do you need to give a tenant that you’re coming over to fix a dripping faucet or a Realtor is coming to show your duplex to a prospective buyer?

Ask a Minneapolis or St Paul duplex owner that question and odds are they’ll tell you it’s a minimum of 24 hours notice. Ask their tenants, and they absolutely will.

But that’s an urban myth. Like alligators in sewers.

And even though I’ve blogged about it before, it bears repeating.

In Minnesota, landlords may enter a unit at any time provided they have made a reasonable attempt to notify the tenant. Unless, of course, your lease specifically states otherwise.

What’s a reasonable attempt?

Who knows? Minnesota state law doesn’t define it. (For questions, contact Minnesota Attorney General Lori Swanson.)

While the right thing to do as a citizen of the planet is to give your tenants as much notice as you can, there are times when that’s just not possible.

And if your tenant insists otherwise, politely share Minnesota law with them. After all, they might think there’s alligators in the sewers too.

Can You Refuse To Rent Your Minneapolis Duplex To A Packers Fan?

said on September 18th, 2012 categorized under: Tenants

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refuse rent to packers fansThe other day a client told me he didn’t have to rent his Minneapolis duplex to a tenant who was a Packer fan.

After all, he maintained, Packer fans are not a protected class according to either the federal or Minnesota fair housing laws.

And he was right.

My client had just purchased a duplex to owner occupy. Because he is going to live there, Packer or Bears fans aren’t the only classes of people he can discriminate against.

Turns out he can refuse to rent to people with children too. While duplex owners cannot refuse to sell, rent or lease a unit to prospective tenants on the basis of race,  color, creed, religion, national origin, sex, marital status, sexual or affectional orientation, disability, public assistance or who have children.

The exception to this is when the duplex owner lives on the premises. He or she may then refuse to rent to tenants with children. A landlord may also refuse to rent to people with children if the property serves as housing for the elderly.

While the law states nothing about refusing to rent to Packers fans, it’s probably not a good idea. Discrimination, in any form, is a recipe for a lawsuit.

How To Winterize Your Minneapolis Duplex From Vacancies

said on September 10th, 2012 categorized under: Tenants

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winter bootsI don’t know about the rest of the country, but in Minnesota, many duplex owners have realized tenants don’t like to move in the winter.

Why do I bring this up now? After all, it’s September. Football season has just begun. Winter is months away.

Because I don’t know whether it’s the result of too many Snickers bars, or the onset of the holidays, but in a tenants mind, winter starts the day after Halloween.

As in seven weeks from now.

This is particularly important to keep in mind if you’re thinking of buying a duplex. After all, if you have an offer on one, and were planning on closing the sale next month, it doesn’t leave you much time to paint or rehab your duplex before you need to get it rented.

Many of my duplex investors are scheduling closings keeping exactly those challenges in mind.

Is A Minneapolis Duplex Rent Bubble Next?

said on March 26th, 2012 categorized under: Tenants

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duplex bubbleAccording to a recent report from Zillow, median rents for duplexes and other rental properties increased 3 percent between January of 2011 and 2012, while during the same period, home values declined 4.6 percent.

In many large cities, rents rose almost exactly as much as home values fell. Take Chicago, for example; rents jumped 9.1 percent for the year, while home values fell 10.4 percent.

Here in Minneapolis, rents rose 11 percent, while housing values dropped 8.1 percent.

Perhaps that jump is why Minneapolis duplexes and other investment properties seem to be selling faster than new inventory is coming on the market.

As rents rise, duplex ownership will become more attractive and affordable for many duplex tenants than renting.

The challenge is figuring out when that will happen.

The Most Important Word In Duplex Investment

said on November 21st, 2011 categorized under: Tenants

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add no to your landlord vocabularyIf you plan on buying a duplex in Minneapolis — or any other location, there is one word you must have in your vocabulary.

And that is the word, “No”.

Most duplex investors I work with seem to be comfortable with that word when it comes to buying a property that doesn’t work for them due to return on investment, location, or any other reason it might not fit with their present portfolio or lifestyle.

However, I am always surprised by the number of duplex sellers I meet who seem to have forgotten that word when it comes to tenants.

Let me give you some examples:

– One duplex owner installed an expensive water softener for the entire property because one of her tenants allegedly had a skin issue. Mind you, this wasn’t mentioned when the tenant moved in.

– Another duplex owner got behind on his mortgage payments to the point he had received a foreclosure notice, because his tenant had lost her job and wanted to know if she could have another month, and then another and another and another to get him the money.

– One tenant asked her landlord if she could have her boyfriend move in. Two weeks later, it was discovered he was wanted in another state on felony charges.

– A triplex owner changed out an entire sink because a tenant complained about a microscopic chip in the porcelain.

In every single instance, the duplex investor could have saved either money or heartache by simply saying, “No” when the tenant request was made.

Many duplex investors are afraid if they say “no”, the tenant will leave and they will be faced with having a vacant unit to clean, repair and re-rent.

The irony is, in all of my years of being a landlord and a Realtor who specializes in duplexes, I have never had, nor heard of this happening.

Granted, savvy duplex owners make every effort to attract and keep good tenants. This can be easily achieved by keeping your property well maintained and clean with a fair market rent.

And if it’s in your annual budget to make repairs and honor requests made by tenants that don’t have to do with health and safety, by all means, go ahead.

Just remember, a real estate investment property is a business.

And the word “no” is part of every successful business person’s vocabulary.

 

Duplex Owners And Gut Instincts

said on October 31st, 2011 categorized under: Tenants

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Duplex Onwers Follow Your InstinctsA new duplex investor and owner occupant recently asked if she could refuse to rent to a prospective tenant because her intuition told her something wasn’t right.

Unfortunately, state and federal law require duplex owners to a factual reason to disqualify an applicant for a rental unit.

Federally, this logical reason cannot be due to: race, color, national origin, disability, religion, age sex or familial status.

Many states take this even further. In Minnesota, for example, duplex owners may not refuse to rent to someone based on all of the already mentioned reasons, as well as: creed, marital status, public assistance or sexual orientation.

So what legal reasons are there to refuse renting a vacant unit to someone?

Poor credit or an apparent inability to pay rent. It’s a good idea to have a written policy as to what minimum credit score you’re willing to consider for tenancy.

Smoking.

Pets.

A criminal background.

In my new duplex owner’s case, it was the last item that validated her intuition.

It seems the prospective tenant’s fiance was wanted in another state; for the disappearance of a child– which came as a surprise even to the woman applying to rent the duplex!