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For property owners, one of the biggest fears you may have is longer than normal vacancy periods. An empty rental property doesn’t earn you income and may attract vandals and pests, meaning it can actually cost you money. But some rental vacancies are inevitable: Every so often, a property needs to be repainted, repaired, or otherwise maintained.
So how often should landlords plan for their properties to sit vacant for optimal long-term performance? We put this question to five professional landlords and property managers to get a sense of what works.
1. Plan Your Vacancies Around the Rental Market
Benjamin Ross is a Realtor, landlord, and investment specialist with MyActiveAgent.com who has owned many rental houses and units in his career. He recommends taking the “heat” of the rental market into account when planning your vacancies.
“If the market is cooler,” he said, “Upgrades [to a property] may be necessary to beat the competition.” Upgrading a property likely means it will have to be empty for at least a few weeks — but if you’re having trouble filling units anyway, upgrades may be an effective way to entice more renters.
“The market will tell you if your cake needs more icing,” Ross said.
On the flip side, of course, he notes that upgrades typically don’t make sense in a hotter market where it’s easier to keep a property filled. But don’t assume that 100% occupancy is a good thing, cautions Jonathan Tran, a real estate investor with AT Home Buyers.
“If you are able to maintain 100% occupancy, this could be a sign your rental is priced too low and you are losing income in that aspect,” he points out. Given that the average renter stays for three years, Tran recommends expecting a rental to be vacant for about two months every three years. “If you’ve been expecting these losses, you can plan to make these major repairs every three years and maintain your property value,” Tran said.
2. Plan to Repaint Every 2 to 3 Years
Tran’s advice aligns with what Domenick Tiziano, a real estate investor and blogger at Accidental Rental, suggests, though he also notes that the “right” amount of vacancy time varies by property size and type.
For example, while he has condos he usually turns over in a couple of days, “Every two to three years, I need to extend that to about a week to repaint everything.”
Because single-family homes tend to rent for longer periods, Tiziano says he bakes in a week or two of vacancy after every renter. Of course, if your building needs more than a fresh coat of paint and some minor repairs, you’ll have to build in a little more time to get it back into top shape.
3. Expect Major Repairs Every 5 to 7 Years
For major repairs, Tiziano estimates that both condos and single-family homes require larger projects, like HVAC replacement or appliance repairs, every five to seven years. Nick Disney, owner of real estate investment firm Sell My San Antonio Home, agrees.
“Rental properties need substantial upgrades and repairs about every five years,” he said. “Minor repairs can be taken care of while the property is being leased, but many large repairs or major upgrades should be done while the property is vacant.”
Tiziano agrees. “The key is to avoid major repairs while a tenant is in place,” he said. “It is too disruptive to them and too difficult to get work done.”
So when should you make time for these bigger projects? Disney suggests planning major renovations to start just after a lease ends and a tenant moves out.
“Almost all renovations can be completed within 30 days,” he said. “You should be able to do the minor repairs and general turnover during that time as well. If you properly plan out and schedule these renovations, you will have much less vacancy time between tenants and you will be able to keep your property up to market standards.”
Take the Long View on Vacancies
By giving you time to ensure that your property is clean, fresh, and in a condition that keeps it competitive with similar properties in the area, scheduling the occasional vacant month can prevent you from having much longer periods of vacancy down the road.
Interested in other tips for boosting ROI by managing vacancies? Check out our guide How to Find (Good) Tenants to Fill Your Vacancies.
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As a landlord, you may not be aware of all the tax deductions available for your rental property. There are certain items you’re probably already spending money on, and by simply claiming these deductible expenses for your rental property, you’ll keep more money in your pocket when your taxes are done.
In this article, we’ll walk through 10 simple rental property tax deductions to make when you’re filing taxes.
What Are Tax Deductions for a Rental Property?
A tax deduction is an item you can subtract from your taxable income, helping lower the amount of taxes you owe.
You only have to pay taxes on the net income earned from your rental business — or in other words, the rental income minus all the related expenses. This is also referred to as your taxable income.
For example, if you earned $12,000 in collected rent, but paid $8,000 in expenses on that property, you would only pay tax on the $4,000 difference, known as your “taxable income.”
What Impact Can Rental Property Tax Deductions Have?
Properly deducted expenses can make the difference between being profitable and having a loss on your rental business. For an average landlord who is in a marginal tax bracket of 25%, each deduction can result in savings of 25 cents per dollar.
Here’s how that works: The amount saved by each deduction is dependent on your current income tax bracket. So, a deduction of $3,000 reduces your taxable income by $3,000 (not your income). Your true savings is really the amount of tax that is not paid since you were able to take the deduction.
To figure this out, take the amount of the deduction (in this case, $3,000), and multiply it against your income tax bracket. For a landlord with a marginal tax rate of 25%, a $3,000 deduction would result in $750 of savings.
10 Rental Property Tax Deductions for Landlords
These are 10 simple deductible expenses for a rental property that every landlord should be aware of and consider as they file taxes.
1. Mortgage Interest
Your biggest expenses are likely your monthly payments for the property you own, so mortgage interest deductions may be one of the larger deductions for homeowners.
According to Rocket Mortgage, “This itemized deduction allows homeowners to count interest they pay on a loan related to building, purchasing or improving their primary home against their taxable income, lowering the amount of taxes they owe.”
2. Home Equity Loan Interest
This includes interest on the home loans and also for lines of credit or credit cards related to investing in your properties. Keep in mind you can only claim a deduction for payments made for interest, not all interest accrued.
You also should be careful to separate credit cards and not commingle personal and business expenses. Otherwise, you’ll have to go through your credit card and remove all personal expenses.
3. Insurance
Your homeowner insurance expenses may be covered in your mortgage, but any business insurance you have is also an expense to remember.
This could include fire, flood, theft, general liability, and other policies you have to protect your properties or business.
4. Utilities
Make sure you are tracking expenses for all utility payments. These are tax-deductible and truly add up. One helpful way to track expenses is to set up a business checking and business credit card completely separate from your personal accounts.
You may have tenants paying you to cover the utility bills, but you would still claim the utility expenses as a tax deduction because the money you are being paid for utilities is going to count as income.
5. Homeowner Association or Condo Dues
Be aware of any other fees you are incurring for your properties. If you’re paying an annual fee for a homeowner association, this is another cost you can deduct.
6. Salaries and Management
If you have a team of contractors, property managers, assistants, or anything else, make sure you are capturing the expenses related to your people.
7. Repairs and Maintenance
One of your larger expense items will inevitably be repair and maintenance. This includes routine monthly maintenance like lawn care or cleaning, and also larger repairs due to property damage.
You’ll have expenses for the direct costs and also any contractor working on the repairs. You should also keep track of interest payments if you take out a loan or credit for repairs.
8. Advertising and Marketing
Not all expenses are related to your property. As a business owner, you are also spending money on marketing, advertising, local community involvement. All of these are business expenses and should be deducted.
9. Attorney or Accounting Fees
While we’re talking about taxes, keep in mind if you owed taxes from last year, this expense is now tax-deductible. If you paid an accountant to file for you, expense the fees for their work.
The same applies to any professional service either from a lawyer, accountant, etc.
10. Office Supplies
Anything you buy for your rental property business operations, like notebooks, a printer, or some tools you’ve been needing, can be counted towards rental property tax deductions.
It’s best practice to keep these supplies in separate transactions and pay for them with a business credit card.
Landlord Software and Online Tools Are Deductible
Don’t forget that landlord software and online property management tools are tax-deductible, too. If you’re paying for landlord software or using premium landlord features like Avail Unlimited Plus, be sure you’re deducting the cost each year.
Use Online Landlord Tools to Simplify Tax Season
To help simplify tax season, it’s important to keep track of all income and expenses related to your rental properties throughout the year. Tools like the Avail Rental Property Accounting feature make it easy to log and track all of your rental property expenses, no matter how many properties you have to keep track of, for free.
Create a free account or log in to get started.
This article is intended for educational purposes only. For tax advice, always consult a tax professional.
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Since there is no formula or answer for guaranteed success in real estate, the best resource many investors rely on is Gross Rent Multiplier (GRM).
The sole purpose of GRM is to calculate the rate of return by screening potential investment properties and computing rent. It’s similar to other real estate valuation tools with one expectation: GRM analyzes rental properties using only its gross income.
Gross rent multiplier helps give property investors an estimate of a property’s worth, and is calculated by dividing the property’s price by its total gross rental income.
GRM income models keep pace with the changing rental market, much like the real estate’s fair market comparisons. Its calculation method assures you’re buying the right investment property (profitable) versus the wrong property (unprofitable) in a marketable location. That said, it’s not the only calculation you should use to measure a profitable investment.
How to Calculate Gross Rent Multiplier
Gross Rent Multiplier is a mathematical formula used to express a property’s potential income based on the ratio of the property’s price to gross rental income. Insert the fair market value (or the asking price) and divide by the estimated annual gross rental income. As an investor or landlord, you’re looking for the number of months or years it’s going to take for this investment to pay for itself.
Price/gross annual rent = GRM
As an example: Property price $300,000 / Annual gross income (rent) $30,000 = GRM of 10.0
The price is $300,000, and the monthly rent is $2,500 multiplied by 12 months to generate $30,000 per year. Now, you’ve got all the numbers needed to calculate the GRM. The payoff period is 10 years.
What’s not included are the operating expense, the rate of vacancies, cost of insurance, and taxes. You can get this information from the seller’s financials. Two industry options used for a rough estimate of these costs is:
- 1% of the current property value
- $1 per square foot.
Purchasing Income-Producing Investments
Too often real estate investors make the mistake of using the fair market value to calculate the potential income property. The problem with this method is the very nature of real estate is volatile – driven by changes in mortgage interest rates and tax laws. Interest goes up and the cycle begins. Home buying slows down, the number of renters increase, and vacancies decrease satisfying cash flow.
Whether the property is new or older, GRM is a valuable tool for investors looking to buy real estate income streams.
Keep in mind; lower GRMs may pay off the property sooner making it a faster return of investment. However, there’s a risk factor that could trigger higher maintenance costs, affecting cash flow through the initial investment years.
Here’s the grading pattern for GRM:
- 8 to 10 – 25 years or older, possible overdue maintenance.
- 10 to 12 – 10 and 20 years, modernizing maintenance.
- 12 – New quality property 1 -10 years of age, routine maintenance.
- 14 – High rent properties, under ten years of age, efficiency maintenance.
Use our rental property calculator to calculate cap rate, cash-on-cash return, GRM, and IRR in just minutes.
Monitoring Property Rent Values
Now, you know how GRM is calculated and how to compare the GRM investment values. The next function we’re going to talk about is how GRM helps you measure the property’s rental performance.
Although the formula has some limitations, investors misunderstand its multiple purposes:
- You can use it to compare other gross rent properties in comparable locations.
- When evaluating rental data, you can break down the GRM analysis to reveal variable rental prices.
In other words, by gauging the market’s rent in the area, you now have a tool that measures the investment’s market position. True to its real estate roots, property location, and conditions (maintenance) make a difference in earned income.
The calculations give you an idea of how your property conditions and rents measure up against the competition. Don’t forget; not everything is predictable. Being armed with the right information can help prepare for the unexpected.
GRM provides information on key concepts of investment rental properties, offering investors a competitive edge in a changing market segment.
All investments come with some level of risk. As a financial strategy, GRM works as an assessment tool based on collectible facts. It doesn’t mean that every property meeting the minimums of GRM will produce a profit. But it does provide information to make a good investment decision.
If you’re looking for a cost-effective way to manage your property with ease, learn more about managing your rental property with Avail.
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Once you’re clear on who is responsible for what repairs and maintenance in your rental property, it’s time to figure out exactly how to deal with a maintenance request from a tenant. Since maintenance requests usually come without warning, and sometimes they’re urgent, it’s important that you have some processes in place to help you deal with them.
These four tips will help you know how to handle a maintenance request in your rental property hassle-free.
1. Use a Maintenance Tracking System
One of the most important components of maintenance is making sure that it’s easy for your tenants to report maintenance issues in a timely manner. You want your tenants to let you know when a problem arises so it doesn’t turn into a bigger, more expensive one.
The best way to do this is by having a system in place that makes it simple for tenants to report any needed repairs. Using a maintenance tracking system will help you:
- Standardize all maintenance requests: Providing a simple method for your tenants to report any maintenance issues makes the process easy for you both, so there’s never any confusion over when and how a tenant should report maintenance issues.
- Create guidelines: Using a maintenance request form or a standardized maintenance request template will help you and your tenants communicate more clearly and set guidelines about what maintenance information needs to be provided. The Avail maintenance management tool even allows tenants to upload photos of the issue so you can get a clear idea of the problem.
- Stay on top of maintenance issues: If you’re busy or you manage a handful of properties, it’s easy to accidentally let things slip — especially non-urgent maintenance issues. If you have a system for capturing and tracking all your maintenance requests, you can receive notifications as they come up and deal with them one by one, keeping the requests open until they are resolved.
2. Respond to Maintenance Requests Appropriately and Timely
Once you’ve established a reliable maintenance tracking system, received a maintenance request, and determined it’s your responsibility to fix, you need to deal with the issue appropriately and in a timely manner.
If the issue is urgent and needs to be addressed right away, the repair date should be immediate. If it’s not urgent, it’s still just as important to respond and set an appropriate repair date to let your tenants know you’re dealing with it. When you do set a date, stick to it, and make sure your tenants and any third parties (like contractors) are in the loop.
Whether you do the repair yourself or you hire a contractor, make sure you communicate to your tenants what the issue was, what was fixed, and if there’s anything they need to know about the repair moving forward. Tenants will appreciate being kept informed about what’s going on in their home.
3. Decide if You Should Do It Yourself or Hire a Contractor
Whether you genuinely enjoy maintenance work or you’re trying to save money, it can be tempting to try and tackle the maintenance issue yourself. But doing it yourself isn’t always the best strategy. Do you have the time? Considering the cost of materials (and your time), is it actually worth it? And are you certified to make the repair? These are some key considerations to take into account before you decide to do your own maintenance.
In most cases, you’ll hire professionals for repairs. You want to make sure they are reputable contractors and will treat your property and tenants with the same level of care you would.
Just as communication with a tenant is important, your communication with your contractor is just as critical. Make sure your contractor knows exactly what the issue is, make sure you’re both on the same page about what needs to be done, and make sure the tenant is aware that the contractor will be making these repairs (and when).
4. Budget for Rental Property Maintenance
Finally, as a landlord, it’s crucial you have a financial game plan for maintenance. Maintenance problems don’t come on schedule, but you can at least be prepared by budgeting and setting aside funds for repairs.
If you haven’t used a budget for maintenance, deciding how to start can be tricky. Depending on the age and nuances of the property, landlords usually recommend setting aside anywhere from 2% to 10% of rental income for maintenance.
It can also be helpful to track all maintenance expenses for six months to a year and then create an estimated budget for the next year. The Avail maintenance tracking feature makes it easy for landlords to document and track all maintenance expenses for each property.
Track Maintenance Requests With Avail
While rental maintenance can be a headache, it’s part of being a landlord — so the simpler you can make the maintenance process in your rental properties, the better.
With Avail maintenance tracking, tenants can submit maintenance requests through their Avail accounts, complete with all the necessary details — and if necessary, photos of the issue, so you don’t have to visit the property in person to understand what’s going on.
Landlords can respond to the request and in-app message with their tenants about the issue and the repair progress. We also provide suggested contractors to make the process even easier.
Once the repair has been made, landlords can upload receipts as proof of repair, and easily keep track of all maintenance issues and expenses right in their accounts.
Get started managing your rental property maintenance with Avail.
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No matter how thorough and consistent you are with preventative maintenance, landlord repair responsibilities are tasks you should plan to handle throughout the year. When things go wrong and need to be repaired, there is a lot for you as a landlord to think about. Who needs to fix it? How involved should you be? How fast are you required to fix problems?
These questions are not always black and white, but here are some guidelines that will help you make quicker decisions as you handle maintenance requests.
What Is a Landlord Responsible for Repairing in a Rental Property?
The following is a list of repairs that you as a landlord are likely responsible for and should plan to respond to if they become a problem in your property.
1. Property Needs to Meet Local Health and Building Codes
Hopefully, this has been resolved prior to anyone living in the space, but if this issue is brought up by a tenant you’ll be responsible to verify everything is up to code. If, for some reason, the property does not meet local codes, you’ll need to make the repairs immediately.
2. Visible Mold
If any visible mold is found in the space, because something like water damage or a leak, you’ll be responsible for repairing and eliminating it. However, if visible mold is found and it’s clearly due to negligence or failure to keep the property clean by the tenant, then the tenant would likely be responsible.
3. Pests
If your tenant discovers a pest issue, you’ll need to resolve it as quickly as possible. Make sure you’re conducting regular preventative maintenance to stay on top of any potential pest issues.
4. Changing Locks
When a new tenant signs a lease for your property, most states require changing the locks so the new tenant knows they are the only one with the key for their place. As the landlord, it’s your responsibility to make this change. If you don’t change the locks, a new tenant is in their legal right to request that you do.
5. Heat, Electric, Hot and Cold Water
As a landlord, you are responsible for ensuring your property has heat in the winter, air conditioning in the summer (if your unit has air conditioning), and hot and cold water.
If these systems break down or fail to function, you will be responsible for getting them back to working order. Many cities have very specific time frames in which you must make these repairs, so always consult your local landlord-tenant law to make sure you’re abiding by them.
6. Structural Integrity and Weather Protected
Part of providing a “habitable space” means ensuring the structural integrity of the property and making sure there are no major cracks, broken windows or doors, or any other damage that would create an unsafe and uninhabitable living condition for the tenant.
Similarly, you’ll need to ensure the property is secured and weather-protected — any leaks or places where water is able to come into the living space will need to be repaired by the landlord.
How Long Does a Landlord Have to Make Repairs?
When a request comes in, you’ll first have to assess the urgency of the situation. For matters that make the space uninhabitable, most states require a 24-hour response. Examples of this would be a major leak or a broken heater.
For less urgent requests, a 48-hour window is sufficient, although a landlord should prioritize proactive communication to let the tenant know what to expect and that you are taking control of the situation. The faster you’re able to respond to and fix issues, the better your relationship with your tenant will be.
What Is a Tenant Responsible for Repairing in a Rental Property?
Just like landlords have some clear-cut directives on maintenance issues they are responsible for, tenants also are required to stay on top of certain items. For the nitty-gritty details, you should refer to your lease agreement, but the following are responsibilities every tenant is expected to maintain.
1. Regularly Discarding Trash
This is self-explanatory, but trash left for long periods of time invites a lot of other problems. Trash invites mold, pests, and smells you do not want in your property.
Make sure tenants know they are responsible for taking out the trash regularly and make it as clear as possible where the trash needs to go. We recommend highlighting these details in a tenant welcome letter when your tenants move into the property. You can view our sample tenant welcome letter here.
2. Damage Caused by the Tenant or Their Guests
If your property gets damaged by a tenant (like a hole in the wall), it will need to be repaired, and the tenant will likely be responsible. In a perfect world, they will report the issue to you so you can inspect and bring in a professional if necessary.
If the tenant volunteers to repair themselves, you’ll want to inspect and make sure it’s up to the standards for your property.
3. Issues Due to Misuse of Property Per the Lease Agreement
If your tenants have done anything violating their lease agreement that needs painting, repairs, or additional cleaning, they would be responsible for repairing that damage.
Common examples of this would be if they are smoking in the property and it leaves stains or smells. Similarly, if your lease agreement says no pets, but they’ve had a pet, the tenant would be responsible for cleaning costs associated with the pet.
4. Timely Reporting of Any Maintenance Issues
As a landlord, you need to make sure your tenants know that they must report all maintenance issues as soon as possible. An issue left alone for a long period of time will only get worse.
The best way to encourage tenants to report all maintenance issues in a timely manner is by making it very easy for them to do so. Make sure you have a clear and simple process for reporting any maintenance or necessary repairs, and make sure you are responsive to all requests. If you don’t respond, you can’t expect the tenant to alert you in a timely manner.
Do Landlords or Tenants Pay Maintenance Fees and Repair Costs?
If the landlord is responsible for making the repair, then they should pay for the repair. Likewise, if the tenant caused the damage and is responsible, then the tenant will need to pay, unless some other agreement is worked out.
Refer to Your Lease Agreement When Uncertain About Repairs
The lease agreement should provide answers for any questions or gray areas concerning maintenance. That’s why it’s important that you and your tenant both have access to the signed lease agreement, and that your lease agreement is comprehensive enough to address things like maintenance and repairs.
Each state has specific landlord-tenant laws related to maintenance, so it’s important that your lease is state-specific and that you know your local ordinances.
Make It Easy for Your Tenant to Report Maintenance Issues
One of the core responsibilities of a tenant is to report issues as they arise so they can be handled promptly. And as a landlord, it is essential that you make it as easy as possible for your tenants to communicate maintenance requests.
With Avail maintenance tracking, tenants can quickly and easily communicate with their landlords about repairs and maintenance issues. Tenants can document the issue, upload photos, and message with their landlords from their accounts. Landlords can respond to the requests, provide maintenance progress, and keep track of all repairs and expenses.
Once you have an effective and easy-to-use platform for managing maintenance, learn how to best handle any maintenance requests.
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Success as a landlord requires a specific mindset of decision making, organization, problem-solving, and making the most of opportunities.
The one thing that threatens to knock you off your game more than anything else is maintenance. Maintenance requests don’t pick convenient times or dates — they are unpredictable, stressful for the tenant, and can easily create a chaotic environment for you if you take the wrong approach.
That’s why preventative property maintenance is an important part of running a successful rental business. Here’s how to conduct preventative maintenance regularly and save yourself time and headaches in the future.
The Property Maintenance Checklist You Need
The best-case scenario as a landlord is to systematically work through every property at least once a year and go through a checklist to make sure everything has been looked into.
The following list outlines major items to work through and check off so you can ensure your property is in good shape, or to fix so you can address problems before they start to deteriorate.
1. Pest Control
Make sure there are no pest issues that are building up and threatening to grow. Living with pests is uncomfortable for any tenant, so you’ll want to ensure this step is completed on an annual basis.
2. Water Damage or Leaks
As you do a walk-through of the entire property, remember that the goal is to find any small issue that could become a big one. Water is probably the most common problem that can start very small and end up doing a ton of damage.
During your walk-through, start by looking at all water sources and make sure there are no leaks or places where water is not contained. Your faucets and toilets should be working properly with no water drips or leaks, and ceilings and walls should be clear of any signs of water damage — rainwater can find its way in and create a lot of headaches.
3. Inspect and Refresh Shower Caulk and Grout
On a similar note, when you are in the bathroom, take a look at the caulk and grout. Are they showing signs of wear and age?
If so, it’s a pretty simple touch up to add caulk and make sure everything looks great and fresh. This can be a nice cosmetic touch, but also keeps water contained and helps make sure a leak or drip isn’t going to become a big issue.
Clogged drains can also become a larger issue. A simple fix is be to add hair catchers to showers and baths to prevent clogging.
4. Inspect Roof and Clean Gutters
Make sure the shingles are in order and there is no serious damage. A damaged roof is a common source of a leak that ends up leading to major repairs.
Keeping gutters clean helps the water flow away from the property so everything is dry and in good shape, and can also help decrease possible fire hazards.
5. Patch Cracks in Ceiling or Drywall
These small touch-ups will make the property look great and keep any cracks or damage under control before they expand.
6. Replace Filters in Air Conditioner and Furnace
As big expenses go, your HVAC system can provide some of the bigger expenses for maintenance. One very simple and regular practice is to change the air filters in your air conditioner and furnace at least twice a year, but preferably every three months.
When filters are clogged and dirty, your systems have to work harder and are at risk for failure or major damage. Keeping fresh filters provides a nice break for the units and is a simple update.
7. Flush the Water Heater
Your water heater is another big, expensive piece that is used every day. Water heaters tend to collect sediment and the water can get dirty over time.
A good practice is to flush the water heater twice a year to keep the water clean and everything running smoothly.
8. Check Smoke and Carbon Monoxide Detectors
This is a best practice to remember any time you are in a property. Do a quick check and make sure they are working properly for your (and your tenant’s) peace of mind.
9. Check for Activity That Violates the Lease Agreement
Unfortunately, sometimes tenants do things they shouldn’t in your property. Your maintenance walk–through is also an opportunity to make sure nothing is happening that violates your lease agreement or could cause damage to the property.
Examples could be additional people living at the property, having a pet that wasn’t allowed on the lease, or anything that indicates smoking inside the property.
When to Use a Property Maintenance Checklist
At least once a year, you should set aside time to work through this checklist in every property you own. For the reasons detailed above, this will have a huge long-term benefit.
Rather than simply scheduling annual preventative maintenance, we recommend staggering the dates so you see the property in all seasons. One way to do this is to see a property every nine months — this means you are going to the property every year, but in alternate seasons.
How to Communicate With Your Tenants About Maintenance
It’s advised to schedule preventative property maintenance before, during, and after a tenant lived in the property. This helps you get valuable feedback from the tenant about the property, such as odd sounds or cracks they’ve noticed. You also get a chance to observe how they are using the property in case of any issues.
Just make sure that you schedule all maintenance visits well in advance and set proper expectations so there are no surprises for the tenant. Also communicate every repair you’ve made to the tenant so they’re aware of what’s happening. The easiest way to manage all maintenance requests and communication is through an online maintenance tracking tool that you and your tenants can access and update.
Manage Property Maintenance With Avail
After you’ve checked the property using a preventative maintenance checklist, you’ll need to know which property repairs are the landlord’s responsibility and which ones the tenant is responsible for. Once you’ve established what repairs need to be handled, you can keep track on the progress of all maintenance on Avail.
Create an account to make managing property maintenance easier and less stressful.
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Completing an apartment move-in checklist both before and after renting an apartment is a great way to ensure you get back your security deposit in full. Since unpaid rent and damages to the property can result in the landlord withholding part of the deposit, it’s important to have a checklist on hand to keep track of any damages that need to be escalated.
Here’s how to utilize a move-in checklist to increase your chances of getting your security deposit back in full.
What Is a Security Deposit?
A security deposit is a fixed amount of money a property manager or landlord will require you to pay to in order to move into the apartment. This fee is usually returned once the lease term ends, unless you caused damage to the property that you’re responsible for fixing or you were unable to pay rent.
A landlord is legally required to let you know why they’re withholding your security deposit and return it to you if you did not violate any part of the lease. Certain states also have limitations on how much a security deposit can be so it’s advised to research local landlord-tenant laws to ensure the amount is fair.
States vary in how much a property manager or landlord can charge renters and have price-caps they must abide. Landlords may be able to require one month’s rent or up to three months’ rent for a security deposit, but this varies on your background check and local ordinances.
Why Your Move-In Checklist Is Important
A move-in checklist helps protects both you and the landlord during the lease term. Unless the rental property is brand new, most homes have had previous tenants that may have caused wear-and-tear over time. Utilizing a move-in checklist allows you to track the condition of the apartment to help you be aware of any repairs that need to be done or damage to notify your landlord about.
How to Use the Apartment Move-In Checklist
- Read your lease agreement: A rental lease agreement should clearly outline what you’re responsible for fixing, as well as your landlord. If you’re responsible for repainting any rooms before moving out or cleaning the apartment, it’s important to be aware of this to avoid having your security deposit withheld.
- Take pictures and videos: Photographic evidence is the best way to defend yourself. Look for things like large holes in the walls, water damage, and even wear-and-tear the day you move in. Timestamp the pictures and store them in a file. If needed, you can use them as a reference upon move out.
- Reference your move-in checklist when moving out: You use this same move-in checklist when you move out. You can compare any pre-existing damage to current damage in the home. Be sure to spackle and paint any holes in the walls. Look at blinds and doorknobs so you can replace them as necessary. The last step is to clean the home from top to bottom.
It is far more cost-effective for you to clean and repair small things yourself before you return the keys to your landlord. If the landlord charges you, they may not be as cost-conscious repairing the damage if it’s not coming out of their own pocket. The goal is to get your security deposit back in full.
What Happens If You Don’t Get Your Deposit Back?
If your landlord withholds any portion of your security deposit, they will need to provide an itemized list of damages and repair costs, or months of rent owed. If your landlord paid to fix the damage that you didn’t cause, then you can rely on your move-in checklist to prove the damage was pre-existing.
There are also different types of damage, with one being the landlord’s responsibility and the others being yours. Here’s a list of damages to be aware of that can result in your security deposit not being returned:
1. Wear-and-Tear vs. Damage
The landlord may not charge your security deposit for wear-and-tear. This type of damage naturally happens when occupying a rental property. Examples of wear-and-tear are:
- Paint: Repainting after two years or more is normal. The landlord should not charge you for repainting if you’ve been in the home for over two years.
- Cleaning: The tenant should do a standard move-out cleaning that meets written standards. But the landlord should be cleaning things like ducts and septic systems.
- Locks: changing the locks after a resident moves out is customary. Owners do this for safety reasons. It’s a cost of doing business that owners should not charge for after moving out.
On the other hand, damage is caused by destructiveness or neglect on behalf of the tenant. The tenant will be charged to repair damage to the home, including:
- Damaged bathrooms: This includes missing toilet seats, broken mirrors, and cracked tubs.
- Urine stains: If you have a pet and you don’t clean up their urine that would come out of your pet deposit.
- Water damage: Most leases contain a mold addendum. It states that residents must notify management if there’s a leak. If there is water damage, you may be charged for the repair and potential mold remediation.
2. Unpaid Rent
The landlord can withhold all or part of your security deposit for unpaid rent. Unless you are withholding rent due to the condition of the home. For example, if the landlord refused to fix the furnace during the winter you may withhold rent. Be sure to speak with an attorney before going this route. Each state will vary regarding landlord-tenant laws. Make sure you check out your state’s laws before signing your lease.
Moving into your new rental is an exciting time. But you need to understand the agreement you are making with the landlord. It always helps to understand your rights. Especially when it comes to getting your money back.
Use the Avail Apartment Move-In Checklist
At Avail, you can complete a digital move-in checklist to send to your landlord for review. You can also invite your landlord to Avail to start making rent payments online, track maintenance issues, and more. Sign up today to set up your account and send your landlord an invitation to join Avail.
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]]>Nate Smoyer, a real estate tech expert at Tech Nest, recently published an episode reviewing Avail.
The review focused on three primary benefits for landlords working with Avail, which Smoyer agreed “helps landlords feel good about their rentals.”
Online Tenant Screening
Smoyer is a rental property owner himself and pointed out a strength of Avail in online tenant screening, focusing on the screening reports and credit reports.
Screening online saves landlords time and helps ensure they only have the right tenants.
Syndication
The review also noted the importance of syndication for rental listings. Avail pushes listings out to a variety of channels making it easy for tenants to find listings.
Payments
As most landlords agree, one of the biggest challenges is collecting rent payments. The review highlights Avail’s online rent collection, noting automating payments is essential for landlords.
This is especially true the further you are away from your properties.
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There may be instances where tenants temporarily move out of a rental property before the lease ends, prompting them to consider subleasing to cover the rent while they’re gone. Most lease agreements include a subletting clause to address whether or not tenants can do this, but if it doesn’t, landlords can legally modify the terms with a lease amendment.
Before opting for subleasing, it’s important to know what this entails, alternatives to subleasing, and what to avoid.
What Is a Sublease?
A sublease, or a sublease agreement, is when a landlord and tenant agree to rent out the unit to another resident not originally on the lease agreement. Tenants generally sublease their unit if a roommate recently moved out or they’re planning on moving out before the lease term expires and don’t want to cover the rent.
Lease agreements generally include a sublease clause that outlines whether or not it’s permitted and what steps to take before finding a new tenant. However, you can modify an existing lease with a lease amendment to include a subletting clause. That way, both parties are still protected in the case of subleasing.
What’s the Difference Between Subletting and Subleasing?
Subletting and subleasing are often used interchangeably, but they have entirely different meanings. Subletting is when a new tenant replaces the original tenant on the lease agreement, resulting in the landlord having to create a new lease and collect rent from them moving forward. On the other hand, subleasing is when the original tenant is still responsible for the rental unit, rental fees, and incurred damage costs despite finding a subtenant.
If your tenant suggests subletting the rental property versus subleasing, this will require different steps, which is why it’s important to know the difference between the two.
How to Sublet a Rental Property
In a perfect world, your tenant gets to move on while you have a great new sublessee and keep receiving your rent payments on time.
In the real world, however, things sometimes go wrong. To make sure subletting works out for you, there are some steps you can take to ensure success, which we’ll discuss below.
1. Screen Prospective Sublessees
When subletting property, your tenant is responsible for finding a subtenant. As the property owner, however, you should not be completely absent in the process.
Tenant screening is crucial for landlords because you ensure only vetted people live on your property — securing the tenants who are most likely to take care of your property and pay on time. Inform your tenant that you plan on having the final say on the subtenant and that they must undergo a tenant screening process.
2. Tenants Must Have Written Permission to Sublet
Including this requirement in the sublet clause of your lease agreement will ensure tenants ask for your express permission before beginning the sublet process. The more you formalize this, the more you’ll communicate to your tenants how seriously you take the leasing process, and they’ll take the same care in subletting.
3. Sign a Subletting Agreement
Once approving the new tenant to sublease the rental, it’s important to sign a legally-binding subletting agreement. This ensures all parties (including your existing tenants) are aware of who pays rent, who is responsible for property damage, and so on. This can also ensure the new tenant is aware of your rules as a landlord to reduce hiccups.
To create a subletting agreement, you can work with a lawyer or refer to local landlord-tenant laws to see what information to include.
4. Have Set Payment Processes
The last thing you want (or have time for) are disputes and confusion over rent payments changing hands. Online rent payments from your tenant will guarantee you are receiving rent payments in a timely manner each month.
Your tenant will then work with the sublessee to collect their rent. If your tenant doesn’t want to be in the middle, you can require the sublessee to pay online with a credit card or via ACH. Ultimately, your tenant is responsible for their rent payment every month. If they are subletting, make sure your tenant knows they are still required to make their payment.
How to Modify a Lease to Include a Subletting Clause
To modify a rental lease to include a subletting clause, you can create an Avail account to access our lawyer-written lease amendment templates. The information you’ll need to input is the parties involved, the effective date, and the part of the lease being amended.
Once the document is ready to sign, our system will email it to your tenants to download and sign to return for a countersign. The lease amendment will be legally binding once all parties have signed and agreed to the terms.
Are There Other Options Other Than Subletting?
Local landlord-tenant laws may require you to allow subletting, but you can still present alternative options to your tenants. Remember, the reason subletting comes up is usually a change in circumstances for the tenant. Subletting is an opportunity to keep the rent payments coming in.
Another way to accomplish this goal without subletting is to give the tenant a chance to break their lease agreement early. If a tenant approaches you about subletting, you could encourage them to “buy out” of their lease with an early termination option. You could require 60 days’ notice and two months’ rent fee.
In that period, you could find a new tenant and get back to collecting rent with little complexity. Remember to include this buy-out clause in your lease agreement first.
Access Lawyer-Reviewed Lease Documents
Whether you’re planning on including a sublease clause in your lease or need to make changes to an existing agreement, Avail offers free lawyer-reviewed and state-specific lease documents such as rental agreements and lease amendments.
To make a lease agreement, you can easily do so in less than 30 minutes and sign online at no additional cost. If you want to further customize the template, you can upgrade to Unlimited Plus for $7/per unit to add your own custom clauses. You can also upload ready-to-sign documents to collect digital signatures from tenants to make the process easier.
Avail offers lawyer-written lease amendment templates to legally modify a lease agreement to use for your rental properties. Once they’re ready to sign, our system will automatically email tenants the agreement to download, sign, and return for a countersign. In both cases, it’s now easier to ensure your lease agreement protects you and your rental business in the case of subletting.
Create an account or log in today to get started.
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Becoming a rental property owner is a challenging gig. It’s often not rewarding. It’s inconvenient in terms of time commitments and expectations.
At Avail, we love part-time landlords. Our co-founders themselves are part-time landlords, so you could say this is in our DNA.
Often, we focus on how to succeed as a landlord (more on that below), but another aspect to consider is this: “Why do this in the first place?”
Very few people or companies can clearly articulate WHY they do WHAT they do. By WHY I mean your purpose, cause or belief — WHY does your company exist? WHY do you get out of bed every morning? And WHY should anyone care?
Simon Sinek, Start with Why
Knowing your “why” motivates and keeps you on target when things get challenging.
Why Should I Become a Landlord Now?
Considering why you’re a landlord is important, and it’s also important to look at surrounding circumstances. Is now a good time to become a landlord? What are some of the factors affecting you?
There is certainly a lot to consider in the decision to become a landlord, but, simply put, there has never been a better time to be a landlord.
For one, more and more people are choosing to rent instead of buy a home. In the U.S., economic trends are pointing to a continued increase in renting because of the consumer desire for flexibility and mobility.
According to Zillow, 36% of U.S. households are renters, and that number has steadily increased over the last 10 years.
In addition to favorable economic trends, technology has made it simpler than ever to become a full-time or part-time landlord.
Ten years ago, being a landlord meant entering into a never-ending cycle of paperwork, documentation, and jumping through hoops to create listings.
With modern technology, landlords can very quickly list properties, screen tenants, create lease agreements, and streamline the process of owning rental property.
Who Should Become a Landlord?
Everyone’s situation is different. Just because something works for one person, doesn’t mean it will for everyone.
Being a part-time landlord requires a passion for what you are doing and a commitment to it. If you are not excited about that challenge, becoming a landlord may not be the best investment.
Becoming a Landlord for a Financial Purpose
For many landlords, their rental properties are seen as a financial investment. Putting your money to work is a smart thing to do, and a rental property has a lot of advantages.
For example: Tyler Winn is a CPA by trade, and owns Cirrus Payroll, which provides payroll services for small businesses.
Winn recently bought a rental property and is set to become a landlord for the first time. He has a very specific reason for making this leap. His goal is to use the property to pay for his kids’ college education.
He actually got the idea from Brandon Turner at BiggerPockets. Turner had a similar strategy to pay for a college education with rental property investing.
Creating Cash Flow
For both Turner and Winn, the goal is to create a long-term payout. This should be a goal for just about any investment.
In focusing on funding for their children’s college education, they have a unique and strongly motivating factor besides just growing more cash.
As you consider becoming a landlord, or even if you’re a landlord already, defining a concrete personal goal is worth your time — it’ll be the driving force when landlording and revenue-building gets tough.
A Learning Experience
Winn (the Cirrus Payroll owner) has another goal on top of creating short-term cash flow and funding college for his son. Landlording is also an adventure with new skills, opportunities and possibilities around every corner.
“I’m excited to do this […] As [my son] gets older, he’ll be involved in helping care for the property and in a sense he’ll take ownership of it.”
Turner (the real estate investor at BiggerPockets) put it this way: “This strategy is exciting because I’m not just going to pay for my kid’s education … it’s going to [teach her too].”
The primary benefit is the concrete financial objective, but there may be secondary benefits you don’t immediately recognize. For Winn and Turner, it’s a learning experience they can share with their families.
If you value experiences and sharing as a family, a rental property investment can provide more adventure than other passive investments.
Your Specific Financial Purpose
Maybe you don’t have kids, or your kids have already graduated college. That’s fine — there are many reasons to stay motivated and purposeful in your day-to-day as a landlord.
Do any of these financial reasons people become landlords speak to you?
- Extra income throughout the year for luxury purchases
- Extra income to use as a tax shelter
- Extra income to use as a retirement nest egg
- Replacement income for retirement
- Income to become financially independent
The beauty is that every landlord will have a different “why.” What’s important is to define why you are making this decision and to be deliberate in your actions.
Becoming a Landlord to Provide a Home
For husband and wife Kory Slaatthaug and Mickey Bambrick, their experience as a landlord comes with a completely different purpose. They are motivated to give their tenants a home.
In fact, they did something so drastic that they went viral.
They gave all of their tenants one free month of rent. They left a note for each tenant letting their tenants know they could take the month off of rent.
Offering a different perspective than the typical financial goal, this is what Bambrick said about their approach to being landlords:
“We’re not into the numbers; we’re into creating a home for people,” Bambrick said. “I was a renter for 23 years, and I think renters kind of get treated like crap. And turning into a landlord made me realize, this is their home, and they need love and respect.”
It’s clear what motivates these landlords — they care deeply for their tenants and want to provide a better living experience. They believe the money will take care of itself.
“We’re not into the numbers; we’re into creating a home for people. I was a renter for 23 years, and I think renters kind of get treated like crap. And turning into a landlord made me realize, this is their home, and they need love and respect.”
Mickey Bambrick, landlord
Many, of course, would say this is crazy. But that’s the great thing about your “why” — only you can identify it, and you don’t have to live by anyone else’s “why.” If you are trying to move forward with a phony “why,” it won’t help you in the long run.
There are many reasons to become a landlord, and financial and personal benefits will follow. But the common denominator is when you have a purpose, you are more excited to go to work every day, and more likely to become a successful landlord.
How to Become a Landlord
All of this said, you still need a game plan for success.
You may have the greatest purpose in the world, but if you don’t attract tenants or can’t collect rent on time, you simply won’t meet your goals.
“Passion alone can’t cut it. For passion to survive it needs structure. A why without how has little probability of success.”
Simon Sinek, Start with Why
At Avail, our “why” is that we truly believe it’s important to help landlords succeed in what they’re doing so they can meet their goals. We want the entire renting process to be less daunting for landlords and tenants.
That motivates us to offer the best app for DIY landlords, create unique payment tools like FastPay, and write free educational pieces to make renting easy for everyone.
Maybe you have a great reason to be a landlord, but are struggling with the fundamentals.
The purpose of this article is not to cover all the steps, but to understand why you want to be a landlord in the first place. When you’re motivated to succeed, you can take the steps one-by-one and achieve your goal.
At Avail, we want to see purposeful landlords achieve their goals, and we will support you every step of the way.
The fundamental aspects of being a landlord are made simple with Avail:
- You need to be able to create rental listings and find tenants.
- You need to have a tenant screening process to get the right people in your properties and send rental applications fast.
- You need to create and send leases that are compliant with your state’s laws to protect yourself and your properties.
- You need rent collection tools to keep cash flowing.
- You need a system to collect maintenance tickets and manage maintenance tracking so it’s a great experience for the tenant and you don’t get overwhelmed with requests.
Avail can help with all of these to make your life easier as a landlord. Sign up for free.
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