Posts Tagged ‘Protecting Tenants at Foreclosure Act’

Indianapolis Rental Property How To: Security Deposits

Wednesday, January 15th, 2014

Always charge a security deposit when you have tenants move into your property. Avoid the “move in today with no deposit required” sales pitch because security deposits are really important. If a tenant balks at paying a deposit or wants it divided up into three different payments over a few months, I would continue looking for a better tenant. It’s always a concern if a tenant does not have the financial resources to pay for a security deposit and the first month’s rent.

What do you charge?

Our policy is to charge the equivalent of a month’s rent. So, if one of our properties rents for $1,200 per month, we are almost always going to charge a deposit of $1,200. We rarely, if ever, discount our security deposits.

Where should you store the deposit?

It’s important to set up an account where security deposits are the only thing in the there. As a professional property management company, we never want to co-mingle our owners’ money and our money. Since the security deposit is considered the tenant’s money until the end of the lease, we hold it in a separate account that only has security deposits in it. Check out your state and local laws. If it’s an interest bearing account, some states require you to provide that interest to the tenant when the deposit is returned.

Indianapolis Rental Property Security Deposits

How do you disperse the deposit?

Again, it’s state-driven. In Indiana, we have 45 days to return the deposit in full or provide a letter noting what deductions were made from that security deposit. If you’ve paid attention to my previous blog on wear and tear, this is where that information because extremely important. If your security deposit is $1,000 and you feel like the tenant did $200 of damage outside of wear and tear, you’ll need to refund the $800 within 45 days and provide documentation on how that $200 was spent.

Security deposits are important and there are a lot of laws surrounding them. It’s important for landlords to be up to speed on what’s happening with requirements. If you have any questions about your security deposits, or you need help setting up a system and an account for your security deposits, please contact us at T&H Realty Services, and we’d be happy to work with you.

Indianapolis Rental Property Maintenance: Vendors and Emergencies

Wednesday, January 8th, 2014

Today we are talking about vendors and emergency maintenance. If you are a do-it-yourselfer, that’s great. You can save yourself a lot of money. You can paint, take care of cleaning and maybe do any small repairs that are easy to manage. That’s assuming you have the time to do it. There are professionals out there who can do that work for you, but if you’re interested in saving money you can do it yourself.

If you’re like me and a lot of other landlords, you need help to make your property ready and to keep up with repairs. I strongly suggest you make connections. Talk to other landlords you know and find out who they use. Conduct a search on Google to find professional vendors with good online reputations. It’s very important that every single person you allow in your home has the proper insurance. Make sure you see proof of insurance on anyone you allow into your home for work. In many cases, these maintenance personnel will need to be licensed as well.

I always recommend avoiding Joe down the street when it comes to plumbing work. Unless he’s a licensed plumber who carries insurance, you don’t want him working on your rental property. A lot of people think they are plumbers, but if your plumbing fails and results in water damage or mold, Joe will probably not be able to take care of that damage. You’ll have larger problems than the initial plumbing fix. Specialized work like electrical and HVAC systems need professionals with property licensing. The liability in those situations is just too great.

Emergency maintenance vendors have to be in place. Hopefully, you won’t need to use them very often but you have to know who to call. When your tenant calls you at 4:00 a.m. and the basement is filled with three feet of water, do you know who to call in that moment? You need to have someone who can get out there quick and take care of the problem. You can’t wait around on something like that.

Indianapolis Rental Property Maintenance

As a professional property manager, we have established great relationships with local vendors who carry the licenses and insurance that is required. It’s great to have those relationships because we’re right there at the top of their list. We are often our vendors’ largest customer, so when we call them, they react very quickly. They also provide extra eyes and ears on our rental homes. They let us know right away if something doesn’t look right.

If you have any questions about how to handle or hire maintenance vendors, please contact us at T&H Realty Services, and we’d be happy to talk to you a little bit more.

Indianapolis Property Management How To: Wear and Tear

Wednesday, October 30th, 2013

If you took a poll of landlords and property managers and asked them what their greatest challenges are, they would tell you that dealing with security deposit issues and wear and tear are the greatest challenges. That’s because the definition of wear and tear is not always clear and people have different interpretations. When someone moves out and work needs to be done on the property, someone has to pay for it. The tenant will have one perspective about what they are responsible for and the owner will have a very different perspective.

We can start with the textbook definition of wear and tear, which is: The physical deterioration which occurs in the normal course of the use for which a property is intended, without negligence, carelessness, accident or abuse of the premises by the occupant, members of the household or guests. So, there is some guidance on the issue. If large holes are left in the walls after a tenant moves out or a carpet has been burned or ripped, you can argue that negligence has taken place.

Some issues are vague. For example, if there are scuff marks on the walls, holes from hanging pictures or the carpet is worn in some places, are these things the owner or the tenant is responsible for?

Indianapolis Property Management Wear TearWe recommend two specific things. First, define and write down what your local ordinances or courts say is normal wear and tear. If judges in your area have ruled that carpets have a seven year life, write that down. If they have ruled that holes more than ¼ of an inch would be a tenant’s responsibility, write that down. Use those documented practices w hen distributing security deposits. Write down all of your criteria so that if you ever find yourself in court, you can produce your documents and hopefully work something out.

We also recommend communication. All of your requirements and definitions of wear and tear must be communicated to your tenants. If you want all the carpets steam cleaned before the tenant moves out, put that in the lease. If you expect the tenant to hire a professional cleaning crew to clean at the end of the tenancy, put that in the lease too. When notice is given by the tenants, it’s a good opportunity to remind them what they agreed to do. You can re-introduce them to the requirements in the lease.

If tenants know you have reasonable expectations and you communicate those expectations at the beginning and end of the lease, those tenants will abide by your rules and do what they need to do because they’ll want their security deposit back. Challenges are inevitable, but they will diminish when you have good policies written down.

If you have any questions about wear and tear or anything pertaining to property management, please don’t hesitate to contact us at T&H Realty Services.

5 Reasons to Choose T&H Realty

Wednesday, October 2nd, 2013

As a full service property management company in the Indianapolis area, we wanted to spend a little time giving you the 5 best reasons to work with us at T&H Realty for all your property management needs.

We are a trusted local real estate company with a lot of expertise. Our staff has over 50 years of combined property management experience. We don’t just work in this market, we live here too. We leverage our expertise every day for our customers, and there is a lot of knowledge and skill to benefit from.

We know how to maximize your asset. We know the rental market in and around Indianapolis very well. Our up to date and detailed analysis and study of the market helps us to get top dollar for your rental property. Our marketing plans also ensure that we can bring together the largest possible pool of potential renters for your property. We will make sure we get a highly qualified tenant for you, and we’ll price your property correctly so you don’t have to worry about vacancy.

Reasons Choose TH RealtyWe know how to safeguard your asset. Our company conducts an array of inspections before, during and after a tenancy. We do a thorough move in inspection, annual renewal inspections and another comprehensive property inspection at the time of move out. We also check the property routinely to make sure everything is working and maintained. For example, we will always do an annual check and cleaning of your HVAC system. We make sure your property is taken care of in the best way possible.

We communicate. That may not sound like a big deal on the surface, but I get calls every week from landlords who are frustrated with their current property manager simply because they cannot get a return phone call or a question answered via email. We go to great lengths to ensure we communicate well. We do a lot to make sure our customers know they are a priority.

We are more than just a property management company. If you want to add to your investment property portfolio, we can help you do that. We have local real estate agents on staff who can help you buy and sell investment properties.

We are proud of the service we provide, and if you have any questions or would like to learn more, please contact us at T&H Realty.

How an Indianapolis Property Manager Protects your Investment

Friday, August 30th, 2013

A professional property manager has many responsibilities, and one of those is to make sure your investment, or your property, is protected. There are a few things a property manager can do to ensure your investment is taken care of properly.

Tenant Screening

The most important thing is the tenant screening. I cannot stress enough how important it is to thoroughly screen a tenant before you let that person move into your property. I have met landlords who say they simply meet the tenant and then trust their instincts to tell them whether or not to approve them. Screening is vital to ensuring you get the right person in your home. It will go a long way towards protecting your property. You want to find a tenant who will not only pay rent on time, but also take good care of that house. It can be dangerous to simply trust your instinct or avoid thorough screening measures. If a tenant shows up with enough cash to pay for the deposit and first month’s rent, we usually have red flags going up in our professional minds. This is usually a tenant’s way of trying to avoid the screening process.

Your property manager needs to do some checking. A good start is with a credit check. You want to make sure there are no judgments against your tenant. You also want to do a criminal background check and look for tenant performance reports too. These are available to tell you if there have been any landlord evictions of your potential tenants. Obviously, you will also want to talk to their current or former landlords. Make sure you are in fact talking to the landlord and not someone posing as the landlord, as can sometimes happen. Confirm income. Check paystubs to make sure they can afford the property and the rent payments. Proper screening sets the stage for having a good chance that your tenant will maintain your property.

Inspections

Routine inspections are also important. A property manager should check the place out prior to a tenant moving in. Make sure everything works and looks good. Do a full walk through to document the condition and note anything that needs to be fixed or replaced. We always recommend another inspection at the time of lease renewal. Make sure the tenant is taking good care of the property and if there is a problem, take corrective action. Address anything in the house that needs attention. Finally, a move out inspection is always necessary to document the condition of the house again and to determine whether any charges will be assessed against the security deposit.

Maintenance

Preventative maintenance is very important when it comes to protecting your investment. Pay special attention to your HVAC. Check the air conditioning and the furnace units regularly to head off any potential problems that will only be very expensive. Emergency maintenance always costs more than preventative maintenance, so those routine checks are important. Take a look at all of the appliances in the house and make sure you do gutter plating and other minor repairs and upgrades that will ensure your property has a long and successful life.

If you have any questions about how to maintain your rental property, or what your property manager should be doing to help you protect your investment, please contact us at T&H Realty, and we would be happy to help you.

“My Landlord is in Foreclosure”

Thursday, November 11th, 2010

We take hundreds, and sometimes thousands of calls from prospective tenants each month. Inevitably, a few of these prospects tell us they must move because their current Landlord is facing foreclosure.

My staff will not give legal advice, simply because we’re not attorneys and we will not take on that liability. However, most people (Tenants, Realtors and even Investors) do not realize that Tenants now have powerful rights during the foreclosure process, so long as a legitimate lease is in effect.

Way back on May 20th, 2009, President Obama signed the “Protecting Tenants at Foreclosure Act of 2009,” which essentially gives a Tenant the right to stay in a foreclosed home if the Tenant can produce a lease. So, banks, and in some cases individual investors, will become the new Landlord.

One exception to the Act, sometimes referred to as PROTAFA, is when a homeowner, looking to occupy the property as a personal residence, purchases the home. In that case, the homeowner must provide the Tenant with a 90-day notice.

There are several ramifications to the ACT. For example, if we purchase an occupied property at a Sheriff Sale, we must understand who is actually occupying the property: the Owner or a Tenant? In today’s landscape, it’s much easier to remove an Owner from a property than a Tenant.

Banks, on the other hand, are now forced to be Landlords and, frankly, aren’t very good at it. Our company was involved for a few months in managing some of these occupied properties through Freddie Mac. To say the process is inefficient and clumsy is an understatement.

At any rate, as a real estate professional, it’s important to understand PROTAFA and refer your clients to the Act where appropriate.