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ADA, HUD, The Fair Housing Act – Which One Applies to Housing and Support Animals?


With many different laws governing service animals, it can be confusing as to which ones apply to housing providers and what they are allowed to ask. This article will review the different laws that come into play, highlight which ones directly affect housing providers, and share tips to help you navigate this sometimes confusing process.

Does the ADA Law Apply to Housing?

Even though the ADA is very important, it doesn’t apply to housing except for maybe the leasing office as it is a public place. Generally, ADA laws apply to operators of public places like Target. The ADA also limits the types of animals providing support to dogs or, in rare cases, miniature horses, which we are not allowed to do as housing providers.

This is where some confusion can take place. The ADA limits what business owners can ask regarding the animal to: “Is that a trained service dog?” and “What work is the animal trained to do?” They are not allowed to ask for written verification.

So when housing providers ask for verification of need, often they are met with the resident referencing this law and stating that they do not need to provide proof of need. This leaves us with the task of informing them that this applies under the American Disabilities Act, but the ADA does not pertain to housing and that the Fair Housing Act permits verification when the disability and the need for the animal are not observable.

For example, if you can see that the animal is a guide dog, then you shouldn’t be asking for verification. But if it’s a dog that is a service animal for disabilities such as hearing problems or alert someone that they’re about to have a seizure, you can’t see that when you talk to the resident. In that case, you can ask for verification. And if they say to you that’s not permitted, then you have to clarify: “I’m asking you this not under the Americans with Disabilities Act, but under the Fair Housing Act.”

HUD and Support Animals

HUD defines support animals that do work, perform tasks, provide assistance, or provide therapeutic emotional support for individuals with disabilities.

HUD also clarifies the difference between domesticated animals kept in the home (traditional) and non-traditional unique animals such as goats, pigs, chickens, snakes, etc. HUD states that the resident has a substantial burden to be able to show that they need a unique animal as an assistance animal. Now, it is not impossible to justify a unique animal. Still, they’re going to have to explain in more detail than with a usual animal why they need their snake as an emotional support animal.

HUD also addresses multiple animal requests, again placing the burden of proof on the verifier as to why one animal isn’t enough. HUD has also made it very clear that going online and getting your pet registered or certified on some website by paying money is irrelevant to the question of whether this is an assistance animal that should be approved to live in housing as a reasonable accommodation. If someone hands you one of those registrations or online certifications, you can hand it back to the resident and let them know that it is not adequate to verify their need for an assistance animal.

HUD has made it very clear it considers those websites as taking advantage of people— wasting their money—because those registrations are irrelevant to the question of whether you approve their reasonable accommodation or not.

The Fair Housing Act and Reasonable Accommodations

We have discussed how the ADA—while important—does not apply to housing, reviewed HUD guidelines that create the framework for how housing providers should view assistance animals and what they are allowed to ask. But how does that come together with the Fair Housing Act?

When we look at the Fair Housing Act and Section 504, we don’t care whether an animal is a service animal or an emotional support animal. It doesn’t matter; we don’t need to ask different questions. We only want to know if the resident is disabled, meets the definition of disability, and if that animal is necessary to assist them because of their disability. That’s all we need to be concerned with when you’re verifying a request for a reasonable accommodation.

When your property is looking at a request for an assistance animal, you need to have a very detailed procedure that all staff follows. First of all, the process should be done in writing, complete with a section for the verifier. To be a reliable verifier, the verifier has to have personal knowledge about the resident and should be providing the resident with medical or mental health services, and not merely providing a verification letter or filling out a form.

Suppose you find yourself in the situation of turning someone down because you don’t think their verification is reliable. In that case, you need to conduct a meeting explaining why you are not going to accept or grant their request and attempt to resolve their request; of course, documenting everything along the way.

Fair Housing and Assistance Animals Final Takeaway

As we have discussed, there can be a few pitfalls to understanding the different laws that come into play regarding assistance animals and housing. Regular training is essential to help everyone know which laws apply and how to follow them to ensure fair housing compliance.

Guide to Renting to Military Tenants


Are you looking for new renters and thinking of extending a lease to military tenants? We salute you! However, you need to know what to expect when you enter into a lease with military personnel. Here’s where to start.

How Do I Rent to Military Tenants?

Renting to military tenants can be beneficial for your property management business and offer more reliability. However, it does require a different strategy than renting to traditional tenants. Legally, military personnel are not responsible for the financial burden of breaking a lease due to a deployment or change in orders that involve a relocation.

1. Make Your Lease Military-Friendly

Before you finalize your lease details, make sure it’s military-friendly. Military personnel need accommodations for deployments and flexibility. In some cases, they will have noticed before deployment, though they may only have days or weeks before relocating.

Change the lease length or terms to accommodate deployments and make your apartment as military-friendly as possible.

2. Change Your Rental Price

Landlords who want to attract military renters need to accept Basic Allowance for Housing (BAH) stipends as payment. The BAH depends on the location, local cost of rent, personnel pay grade, and whether or not they have dependents.

If you require renters insurance for your tenants, keep in mind that BAH does not cover it. You may want to include it as part of your lease agreement or adjust the rent slightly to ensure your military renter can pay for it.

3. Provide Military Perks

Military perks are attractive to renters looking for a good deal for off-base housing. Offer a military discount on your listing and consider waiving other costs like security deposits, cleaning fees, and application fees.

Are You Legally Required to Rent to Military Members?

Depending on your rental property’s location, you can legally refuse a military member a lease if you decide it isn’t suitable for your rental business.

The federal government does not consider military status a protected class under the Fair Housing Act. If you are worried about the potential loss of income due to deployments or a change in their orders that could suddenly impose relocation, you can refuse to rent to a military member.

However, some local and state laws may have different stipulations. Connecticut, Illinois, Massachusetts, New Jersey, New York, Ohio, Rhode Island, and Washington currently have fair housing protection based on military or veteran status. Before denying a lease, it’s best to check with your state laws.

Disabled veterans are protected under fair housing laws, and you cannot refuse to rent to them due to their disability.

Things to Consider When Renting to Military Tenants

Renting to military tenants comes with its own set of pros and cons. Here’s what to know before you sign your next renter.

Reliable Income

Military personnel typically enjoy reliable income and job security. Their promotions and incremental raises are usually more predictable than other industries. The addition of a Basic Allowance for Housing (BAH) stipend also makes your rental payments more secure.

You Can Participate in the Military Housing Rental Program

Service members enjoy access to a Rental Partnership Program (RPP) in an agreement with the Housing Service Center (HSC). The program provides military members with affordable off-base housing and aid in reducing some costs associated with relocation.

Have a Large Network to Tap into For Future Renters

Military members have a large built-in network of potential renters. When you need to line up new tenants, ask if their military connections have recommendations or could spread the word about vacant units.

Military Members Undergo a Thorough Background Check

Anyone who wants to join the military goes through an FBI background check at federal, state, and local levels. However, criminal records don’t always disqualify someone from joining the military. A serious felony or five misdemeanor offenses are usually disqualifiers for the military, while some misdemeanor offenses like domestic violence are automatic rejection.

Military background checks also look at potential money problems, including histories of bankruptcies or defaulted loans. The military will even look over social media accounts to ensure the prospective military members are not a threat to national security.

Despite the benefit of an in-depth military background check, landlords should still perform their own. There may be financial issues or areas that are a deal-breaker for you and your rental business.

You Can Develop a Tight-Knit Apartment Complex Community

If you have multiple rental properties and apartments available, you can create a tight-knit community by renting to military members. These tenants are uniquely adaptable to meeting new people, having each other’s backs, and fostering a sense of belonging.

May Move Abruptly

One of the biggest disadvantages to renting to military members is the risk they’ll suddenly need to move or deploy. They often don’t receive much notice and are expected to move quickly. Service members are also protected by the Servicemembers Civil Relief Act (SCRA).

The protection covers active-duty members and prevents landlords from evicting unless the rent is higher than a predetermined amount. In 2021, that amount is $4,089.62, but it changes yearly. One can stop a foreclosure without a court order, and the landlord cannot keep the tenant’s belongings or storage area without a court order.

In addition to SCRA, local laws may also prevent you from taking action if a military member breaks their lease. However, landlords can ask for proof of deployment or relocation orders before allowing service members to break their lease without financial repercussions.

May Not Be Long Term Tenants

Military tenants aren’t usually long-term. Even without deployments, military members tend to move around for their work. Although their finances are more secure, their location stability is not.

Landlords must factor in the costs associated with cleaning, prepping, and updating their apartments more often when renting to military tenants.

Final Thoughts

Renting to military members has its pros and cons. However, landlords may feel it’s their patriotic duty to welcome service members to their rental properties.

We may be apartment experts, but we’re not the final authority on renting to military members. Look to military.com to thoroughly understand military housing benefits, and consult with a lawyer when drafting your new lease terms.

Source: Apartment List

The Inflation Effect on Rent: When To Increase and Justify Your Tenant’s Rent

Turn on the news or browse the Internet these days, and you’ll immediately hear about interruptions to the supply chain caused by staffing shortages and health restrictions due to the COVID-19 pandemic.

If you go deeper down that rabbit hole, you’ll hear about how interruptions in the supply chain contribute to higher inflation and whether you should be concerned about inflation.

But what is inflation? And, what is the inflation effect on rent? We’ll answer these questions below and tell you when to increase rent on your income property.

1. What is Inflation?

Simply put, inflation is the decline of a currency’s purchasing power over time, and the inflation rate is the rate at which purchasing power declines annually or monthly.

Inflation means your dollar buys less than it used to over time, and, consequently, the price of goods and services goes up over the years.

Inflation is bad for consumers because they have to work harder to earn more to buy the same goods they did in the past.

If you’re a rental property owner, tenant boards allow landlords to raise rent legally to keep pace with inflation.

2. How Does Inflation Affect Rent?

Generally, inflation positively impacts rent for property owners because it means that they can increase rent, and therefore, the income they bring keeps pace with the rising price of goods. Inflation also benefits property owners because construction prices go up, which means fewer new rental properties are available.

Of course, inflation isn’t all positive for landlords because as their rental income goes up, so do their expenses. At the same time, rental rates tend to remain consistently on an upward trajectory during harsh economic times, which is why investing in property is seen as a good hedge against the effects of inflation and the rising cost of goods. Investing in real estate means you’ll always be able to keep pace with these costs.

As a nice bonus for rental property owners, inflation also increases the cost of housing, which means fewer people can afford to buy a home, increasing the demand for rental housing.

With increased demand and little supply, property owners are more likely to get the rental rates they’re asking for even if they’re a little high because even though goods and services may be more expensive. Everyone needs a roof over their head, and renting housing is generally cheaper than buying housing, even with inflation accounted for in both scenarios.


Source: Zillow Observed Rent Index (ZORI) (Seasonally adjusted); U.S. Bureau of Labor Statistics Consumer Price Index for All Urban Consumers (Seasonally adjusted); NAEH analysis. Recession data are from the National Bureau of Economic Research (NBER).

3. How Much Has Rent Increased in 2022?

The pandemic has forced many Americans to tighten their wallets and reconsider living arrangements. National rent prices increased by 11.3% in 2021 compared to the previous year. This upwards trend continued into the first few months of 2022, with larger cities experiencing double-digit growth.

New York, California, Florida, and Indiana have seen big spikes in rent prices. The monthly rent for a one-bedroom in New York City is up by 40%, and major metros in California charge up to 25% for a one-bedroom. Other cities in Florida are seeing increases for single bedroom units ranging between 24% to 30% from the previous year.

Rent price jumps are expected to continue, but some of the most expensive states to live in are slowly starting to level out. Even if the days of dramatic hikes are gone, there is still a projection of a 6% rise in U.S. rents this year— double the seasonal trends in “normal” years before the pandemic.

4. Does Rental Income Increase with Inflation?

As inflation drives up rent prices, landlords stand to make more net cash flow. This puts more money in your pocket, but as the costs of goods and services increases, your higher rents, or a portion of them, will be offset by the rising costs of managing and maintaining the rental properties.

Rental Property expenses that have increased during this high inflation period include:

  • Maintenance expenses (lawn care, painting, etc.)
  • Major renovations (roof replacement, new water heater, etc.)
  • Mortgage rates (driven by Fed interest rate hikes)
  • Property taxes (driven by higher property market values)
  • Marketing costs to find tenants (Broker fees)
  • Interest rates on non-confirming loans (Private and Hard money lenders have also increased interest rates)
  • Landlord insurance premiums

You may be wondering by how much? Here are some indicators of consumer prices between June 2021 and June 2022:

The cost of energy, household furnishing and supplies and services (among other things) have increased 41.6%, 10.2%, and 5.5% (less energy services) respectively.

The cost of Building Material and Supplies Dealers increased from 153.50 in January 2020 to 233.562 in June 2022, an increase of 52%.

So what? Why does this matter for landlords and rental property investors?

Our take is that if you don’t raise rents to keep up with this high inflation period, your rental properties net operating income will likely decrease by 10%+ (assuming rents don’t change). If you do raise the rents by let’s say by approximately 10%-15%, you protect your existing net operating income. If you want to increase your net operating income then you likely have to raise rents a lot more (25-40%), but you should be careful about how and when you do that.

5. Why, When, How to Raise the Rent and Keep Tenants

It’s not just a question of when you can raise the rent by law, but under what circumstances you should raise the rent. This is often a question landlords struggle with because, according to the 2019 Group Consumer Housing Trends Report from Zillow, 78% of renters experienced a rent increase in 2019, where 55% of those people stated that their decision to move was directly tied to that rent increase.

Why raise the rent?

No renters, no income. As a result, you have to approach raising the rent with careful consideration and empathy for your tenants. It’s recommended that you increase the rent under the following circumstances (not comprehensive):

  • Market rates have increased
  • Property maintenance expenses that need to be covered
  • Property taxes have increased
  • Insurance premiums have gotten higher
  • Homeowner’s association or condo fees have gotten higher

You cannot raise the rent as a landlord or owner under the following circumstances:

  • You try to raise the rent during an active lease
  • The lease doesn’t allow for a rent increase
  • Advance notice for a rent increase wasn’t given properly
  • The property is rent-controlled
  • The increase is or can be seen as retaliation against a tenant
  • The increase meets the standard for discrimination against a tenant according to the Fair Housing Act
  • The increase is being done as a way to force a tenant to move out
  • The increase is to a level prohibited by local law

When to raise the rent?

The standard timelines for landlords to raise rent prices include:

  • When an existing lease expires. You can’t increase the rent until the current lease term expires unless the rental agreement you signed with a tenant includes conditions for rent increases during the lease period.
  • When a lease converts from annual to monthly. Some landlords use a holdover clause in a lease agreement that states rent will automatically increase in the case that an annual lease converts to a monthly lease for the applicable unit occupied by the same tenant.
  • When a new tenant signs a new lease agreement. Landlords have fewer restrictions on increasing rent for new tenants. Before setting the new rent price, check the market rate for rent in the area, and raising it too high could drive good tenants away.

How to increase the rent?

Raising rent prices is slightly different for month-to-month tenants versus annual lease renewals. Be sure to review state laws regulating rent increases.

How to increase rent for month-to-month leases:

  1. Determine the rent increase based on market rates and state laws.
  2. Give tenant(s) written notice in accordance with state-mandated notice periods (usually 30 days).
  3. Request tenant confirmation of receiving the written notice.

For annual lease renewals, it’s suggested that you reach out two months before the lease expires to discuss rent increases, and this gives you time to take action if the tenant chooses to argue the increase or vacate the property.

There are a few ways to apply a rent increase at renewal:

  1. Modify the existing lease:. The lease should state that all terms will remain the same except the new end date and the new rent.
  2. Draft a new agreement: Sign a new lease stating the new start and end dates, new rent price, and any other changes to the lease terms.
  3. Serve the tenant’s notice:. You may only have to serve a written notice depending on the lease terms.

Similar to the lease itself, the written notice for annual and monthly lease agreements should state:

  • Landlord and tenant contact information
  • The new rent amount
  • The effective date the rent increase starts
  • Rent payment options
  • Both parties’ signatures

You should also consider adding a brief description of why the rent is increasing and how tenants will benefit. For example, a rent increase will allow you to continue providing high-quality amenities and property maintenance.

Our Final Thoughts on the Inflation Effect

For the most part, inflation is beneficial to landlords because it raises the cost of housing which raises rents in turn and, therefore, their gross income. This is because the demand for rental housing increases as people become more willing to pay high rents than an unmanageable mortgage in that economic environment.

As a landlord, you may have higher expenses due to the cost of goods and services going up. Still, having a rental property means you’ll largely be shielded from the consequences of inflation because the rents on your property will keep pace with the inflation rate. You’ll likely be able to pay your rent increases beyond just covering your expenses for a nice tidy profit.

Source: Baseline

Six Ways to Ensure Your 1031 Exchange is Successfully Completed

Whether you are an investor or a real estate broker, selling investment or business real estate can be an expensive venture unless you are prepared to conduct a 1031 exchange.

Section 1031 of the federal tax code dictates that no gain or loss shall be recognized upon the sale of a real estate property held for business or investment purposes, as long as the seller purchases a replacement property of equal or greater value. This can be a solid opportunity, potentially, to preserve the gain and accrue additional wealth. However, the 1031 exchange can be a tricky process that has frustrated many amateur and professional real estate investors alike.

So, to help potentially avoid having your 1031 exchange blow up, here are six steps to consider as you advise a client on undertaking and entering into a 1031 exchange:

Step 1: Know the applicable deadlines. The IRS requires an investor to identify a replacement property within 45 days, and to close on the target property within 180 days of selling the relinquished property. That doesn’t leave much time to hunt for the right deal, but it’s enough time. Working with an expert 1031 exchange investment firm like Kay Properties can help investors successfully complete their 1031 exchange within these timelines.

Step 2: Get educated about acceptable types of replacement properties. The IRS requires an exchanger to reinvest in a “like kind” property. However, “like kind” does not necessarily mean the same type of property. There are a variety of options available. For example, if you are selling a duplex in San Diego, that doesn’t mean you need to replace it with another duplex. The 1031 exchange allows investors to replace relinquished real estate with a variety of asset types. It can be a medical building, single-family home, multifamily apartment building, raw land, self-storage facility or any other investment real estate. The type doesn’t matter as long as it is held for investment or business purposes. Ideally, investors should know what they are looking for in a replacement property well before going into escrow on the property they are selling. Again, working with a 1031 exchange investment firm like Kay Properties can greatly reduce the stress and confusion surrounding 1031 exchanges.

Step 3: Narrow down the options while in escrow. I cannot tell you how many times I have seen 1031 exchange investors in a desperate panic once they hit day 30 of their 45-day window with not a single replacement option identified for their exchange. This is an extremely stressful position. But don’t worry, this article should help spare you the anguish.

One good strategy is to locate five to 10 potential replacement properties as the closing date of the property you are selling gets closer. But be prepared that as you move through escrow, many of the new properties you have identified will likely be acquired by other buyers or will not prove to be satisfactory under the scrutiny of some due diligence. That’s why developing a short list of potential replacement properties prior to relinquishing the original asset can be one of the most important strategies for preventing having your 1031 exchange blow up!

Step 4: Make sure your financing is lined up ahead of time. Investors will often call me in a panic because they’ve located their replacement property, but they cannot access the financing necessary to purchase the asset. It is important to make sure that they have the financing lined up before closing on the property being sold to spare themselves from a stressful and potentially expensive predicament. That’s one reason fractional ownership structures for 1031 exchanges can be attractive for investors wanting to complete a 1031 exchange. For accredited investors, a Delaware Statutory Trust (DST) investment may be a suitable option. In addition, DSTs have a non-recourse financing component baked-in to each investment so the investor does not need to sign for a loan. A DST may be an ideal opportunity for an investor looking to a 1031 exchange to be a passive, turn-key solution with required financing already established.

Step 5: Have a backup property identified just in case. The IRS code allows investors to identify replacement properties using different rules. The most common rules used are to either identify three properties for their 1031 exchange or identify real estate valued at up to 200% of the property that’s being (or been) sold. This means there is room for back-ups. Take advantage of the opportunity. An exchanger should never leave an empty space on their ID form, which is submitted and filed with a qualified intermediary. More often than not, the exchanger’s primary option won’t work out … even if it looks like a sure thing! Also, I have often seen unscrupulous sellers exploit the buyer’s 45-day time clock in order to press their back against the wall, forcing the exchanger into an inferior negotiating position. Backup property options can strengthen the exchanger’s negotiating power by providing additional options.

For accredited investors, a DST can be an excellent option for a backup strategy. DST properties are already purchased, stabilized, and can potentially provide monthly distributions to investors. There is no negotiating and the due diligence is already complete. Additionally, an exchanger can often close on a DST in three to five business days. I often recommend my clients use a DST as a backup ID if there is room in their exchange and it is appropriate for their situation.

Step 6: Make sure to start to negotiate a 1031 contingency in your purchase and sale agreement. Many buyers are willing to allow a 1031 contingency that will permit the seller to extend escrow on the property being sold if the seller can’t find a replacement property. For example, try to negotiate a clause that extends escrow for you by including an additional 30 days if you are unable to identify a suitable replacement property. This can be a quick and easy way to buy additional time should you have difficulty locating the right 1031 exchange investment.

Bottom Line: a 1031 exchange can be a potentially great tool for building and preserving wealth, but it can be a daunting process if not properly prepared. If you decide to do a 1031 exchange, make a point to start early, get educated, narrow down their options, line up financing, have a backup ID, and negotiate for more time in case they need it. When appropriate and if they qualify as an accredited investor, use a DST as part of your 1031 exchange strategy. There are no guarantees in real estate, so it is always best to plan ahead when considering a 1031 exchange.

Position Realty
480-213-5251

Five Red Flags You Can’t See In A Tenant Background Check

Consider the consequences of renting your property to someone with a history of evictions for non payment of rent or a habit of writing bounced checks. Or the effects of allowing someone who has a criminal record or several collection accounts to live on your property. What about a terrorist or sex offender?

It only makes sense that a conscientious landlord would want to know everything possible about a prospective tenant before renting to them. But sadly, there are many property owners who do not take the time to properly screen their applicants. If they choose to rent based on feelings rather than facts and don’t run a tenant background check, they risk paying the price in the end.

In addition to the information revealed on a person’s background check for tenants, there may be red flags that become apparent as you meet with the candidate and go over their application.

#1 The applicant can’t or won’t give you contact information for their current landlord, employer, or personal references. What are they trying to hide? Perhaps these people have negative information or experiences with the candidate that could negatively influence your decision as to whether you’ll want to rent to them or not.

#2 The applicant provides suspicious pay stubs. If your applicant has not supplied employer contact information, you should ask for their most recent pay stubs to verify their employment. It is imperative that you check all the basic information on the pay stub closely and look for any discrepancies in the numbers, formatting and overall quality. This is a long-used scam that has become more popular with the rise in the number of websites that offer fraudulent pay stubs. Self-employed applicants should supply a tax return document with proof of earnings and income.

#3 The application omits information or is inconsistent. Carefully review the application for omitted information or inconsistencies. The profile on the reports should match the person who filled out the application. Make certain that the date of birth, employment history and most importantly, the Social Security Number match the person’s profile.

#4 The deposit check is greater than the amount you are asking for. Always ask for a cashier’s check or money order in payment for the security deposit and first month’s rent. When an applicant wants to pay the deposit or even their monthly rent in cash, it might be an indication that they run a non traceable business or have an illegal occupation.

Be suspicious if they ask you to accept a deposit check in an amount greater than you are asking for with a request for you to refund them the overpayment. Never accept more money than the specified rent for your property and do not accept an out-of-state cashier’s or paper check, especially if it is for more than you are due. This is a well-known scam that will leave you without your money and without a tenant.

Someone who wants to pay the deposit in installments probably lacks the income to rent the property. It may also be that they are not planning to make those additional payments at all. Do not sign a lease until you know that you will receive the security deposit in full before the move-in date. Keep in mind that there are a few cities that have passed “Renter’s Choice” bills which may allow tenants to pay their deposit in payments, but you can still incentivize tenants to pay the deposit in full.

If they are allowed to postpone paying the full security deposit, you may never see that money or the rent for the following months. Should you begin the eviction process, they know that it will be several months before they must vacate the premises. In the meantime, they are living in your property rent-free.

#5 The applicant insists you use a copy of the credit report they provide. Beware if the applicant tries to give you a copy of their “credit report” rather than have you order your own. This could be an attempt on their part to keep you from seeing their true financial history. With today’s technology available to anyone, it is surprisingly easy to create a favorable credit report that will lead you to rent to someone who is not a reliable tenant. Note, New York has recently allowed tenants to furnish their own credit reports, but that still doesn’t mean you can’t pay for and run a credit report yourself. Always verify.

Position Realty
480-213-5251

6 Steps Towards Making Security Deposits Less of a Hassle

Doing any sort of business is about reducing risk and increasing your return. When it comes to managing properties, things can fall between the cracks and strategies go by the wayside. You can do simple things to streamline every process so you can enjoy more rewards with less of a hassle.

First, Food For Thought

New landlords assume falsely that security deposits are adequate protection against having to pay big bucks for tenant-caused damages. The truth is, it will barely cover minor damages. And, major damages to property can cost landlords tens of thousands of dollars.

Another factor to consider is that while the security deposit might cover normal wear and tear, they can appeal that decision if a tenant disagrees. Courts tend to take the side of the renter if there is even a little question about damage. 

Even though security deposits offer marginal protection, they are important. The trick is to know how to manage them in such a way that it does not make you want to pull your hair out or stop taking them altogether.

Tenant-Proofing Property

Landlords can take steps towards making properties tenant-proof. Reducing the chances of property damage works out better for both the renter and the landlord.

  • Vinyl Plank Flooring vs. Carpet — Carpet was once the most popular flooring. But, it stains and wears out rather quickly. Vinyl plank flooring lasts far longer and typically does not require replacing between tenants.
  • Glossy Paint — Paint is one of those things that have changed over the years, too. It is not unusual to have to repaint between renters. When using glossy paint, the risk is less because it is far easier to simply wipe down.
  • Door Stoppers — One of the cheapest remedies can save a landlord the most money. Door stoppers save walls by preventing holes in drywall.
  • Garbage Disposal — Garbage disposal-related problems cause some of the greatest headaches. Removing them will help reduce late-night phone calls and expensive repair bills.

Normal Wear and Tear

The entire point of a security deposit is to cover minor property damage. Wear and tear happen, and it comes with the territory. But, it is always the best policy to explain to a possible tenant what you consider wear and tear. 

Different states have different definitions, but remember that the law tends to lean towards the tenant. It is important to research so you can lay out in a lease agreement what you consider wear and tear versus excessive damage. It will make your position clear and help reduce confusion.

Move-In Inspection

Performing a detailed move-in inspection is likely already on your checklist. But, do you do the walk-through with your tenant? If you do it together, you both can make notes of the property’s condition. Recording it using audio, video, or both will help if a former renter challenges a security deposit return. 

Move-Out Inspection

A move-out inspection is just as crucial as the move-in inspection. It is best if you perform it with the tenant. Retrace your steps and compare notes with the former occupant. It makes it easier to cross-reference and make a decision about the security deposit. Transparency goes a long way to making the process less stressful.

Applicant Red Flags

Interviewing potential tenants does a number of things. You can see how they interact and what they say. A huge warning sign is if they start to complain about security deposits. It likely means one of two things — the candidate does not have the money for the deposit or fears they will lose the money. Both are glaring red flags that should not go ignored.

If you can inspect where the potential tenant lived prior, you can get a better idea of who you are dealing with. It goes a long way towards drawing up the lease and deciding if they are more a liability than a respectful renter.

Security Deposit Alternatives

Alternatives to security deposits exist to help fill vacancies faster. Our Lease Insurance Guarantee is one such option helping tenants put out less cash upfront while providing the landlord with more protection against evictions and property damage. Landlords of all sizes, even one property, can benefit from this type of service.

Landlords can ask their tenants to purchase LeaseGuarantee instead of handing over a security deposit. They offer rental income protection up to $10k to cover legal fees, rental losses, and damages. It covers way more than a security deposit and reduces your overall stress and concern.

Wrap-Up

Sometimes little things make all the difference. Security deposits are sometimes more of a hassle than not. However, they are important to hold tenants accountable and help cover any property damage. 

You want to maximize your return and minimize your risk. You can do this through straightforward renovations, a property management service, or both. The important part is streamlining the security deposit process to make it easier for you and more transparent for your tenant.  

Position Realty
Office: 480-213-5251

5 Ways for Landlords to Evaluate a Self-Employed Renter

Self-employed renters naturally strike fear in a landlord’s heart. Sure, we admire their moxie. But what about paying the rent? What about the ebbs and flows of business? How can you be sure a dip in sales won’t leave them weeks or months behind on paying up?

The same goes for freelancers, gig workers, and all those other professionals without standard, 9-to-5 jobs. They’re worrisome.

Fortunately, you don’t have to take a leap of faith when these tenants come calling to your rental property. There are many ways to both evaluate a self-employed renter’s income and ensure they’re a good fit for your rental all in one fell swoop. Here are five of them.

1. Ask questions

Get to know the prospective tenant. Ask them about the nature of their business, how long they’ve been operating, what types of clients they work with, and more.

You should also find out about the tenant’s credentials, past employment, and education history. How qualified are they to be doing what they’re doing? How likely is it they have the connections and skills to keep their business afloat?

You can also special order a business credit report from AAOA for $59.95 to find out if their business has good credit, high debt, lawsuits, violations, or high risk of default. Call (866) 579-2262 to request a comprehensive business credit report.

2. Research the business

You should also research the business. Do they have a website? Are they registered with your state? Are they licensed and insured? These are all indications a self-employed person is legitimate. (You might even be able to check out their pricing if you find their website!)

I had to rent a home a few years after I transitioned into freelancing, and my portfolio and published links (like those right here at Millionacres) were just a few of the items that helped prove my business’ legitimacy and success.

3. Request bank statements

If you want the most accurate depiction of the tenant’s income, ask for recent bank statements (business ones, if they have a business account). Pay careful attention to the deposits — how much they are, the consistency/cadence of them, etc. — and make sure the expenditures don’t outweigh the incoming cash.

Tax returns can work for verifying income, too, but these often don’t reflect the person’s full earnings — nor are they the most updated picture of their cash flow (they are annual, after all).

4. Pay special attention to their credit report

You’ll also want to pay special attention to the tenant’s credit. Look at the balances on any credit cards, loans, or other accounts they have out, as well as the monthly payment those come with.

You should also look carefully at payment history: Have they had any problems paying bills on time or in full? Are there any collection efforts or derogatory notes in their name? Have they had any bankruptcies or foreclosures? These can all give you insights into the tenant’s financial health — as well as any struggles they may be having.

5. Talk to past landlords

Finally, be sure to ask for the contact information for any past landlords the tenant has had. Call them up, ask about their payment history and, most importantly: Find out whether the landlord would be willing to rent to them again. Typically, if a landlord says “no” here, you’re best off moving to the next candidate. (Just make sure you’re abiding by fair housing laws and not discriminating!)
One last tip

If you’re not sure whether the tenant is a good fit, you can always consider requiring a cosigner, also known as a guarantor. This is someone who agrees to vouch for the tenant financially, as well as cover the rent if they’re unable to down the line. You can also have the tenant pay for a LeaseGuarantee policy which can cover future rental losses.

Position Realty
Office: 480-213-5251

Landlord’s Successfully Challenge The CDC’s Residential Eviction Ban

Earlier this year, the Eastern District of Texas invalidated — commerce clause grounds — the Centers for Disease Control and Prevention’s (CDC’s) ability to halt residential evictions during the COVID-19 pandemic. Subsequently, in Tiger Lily, LLC v. U.S. Dept. of Housing & Urban Development, the Sixth Circuit Court of Appeals granted another win to landlords in Tennessee, who argued the agency’s order exceeded its authority.

On March 29th, the court denied the government’s emergency motion to stay a lower court’s order barring enforcement of the CDC’s Halt Order, which extended the moratorium on residential evictions until December 31, 2020. The Sixth Circuit found the government could not show a likelihood of success on the merits of its appeal such that enforcement of the lower court’s order should be stayed.

The decision turns on questions of statutory authority and whether Congress granted the CDC the power to extend the moratorium on residential evictions past the date set out in the CARES Act. After the act’s congressionally authorized moratorium expired on July 25, 2020, the CDC unilaterally issued the Halt Order, extending the eviction ban until December 31, 2020. The CDC based its ability to do so based on Section 361 of the Public Health Service Act, which allows the secretary of Health and Human Services to issue regulations necessary to prevent the introduction, transmission or spread of communicable diseases and allows the secretary to provide for “inspection, fumigation, disinfection, sanitation, pest extermination, destruction of animals or articles found to be so infected or contaminated as to be sources of dangerous infection to human beings, and other measures, as in his judgment may be necessary.” The government argued that a nationwide moratorium on evictions is among the “other measures” for disease control covered by Section 361.

The Sixth Circuit disagreed, finding the Halt Order to be outside the scope of the statute. The court reasoned that the residual phrase “and other measures” was controlled by reference to the enumerated categories before it, and that “[p]lainly, government intrusion on property to sanitize and dispose of infected matter is different in nature from a moratorium on evictions.” According to the court, regulation of the landlord-tenant relationship is historically the province of the states, and, if Congress intended to alter the usual constitutional balance between the states and federal government, it would have done so in “unmistakably clear” language. The absence of such language in the Public Health Service Act was dispositive in the court’s opinion. Notably, the constitutionality of government intrusion onto typically state-dominated areas concerned the Eastern District of Texas case as well.

Given the success of the recent challenges to the CDC’s authority, more lawsuits are sure to come. And, while the public health effects of COVID-19 will diminish as more Americans are vaccinated, the economic effects on both landlords and tenants are sure to endure. It remains to be seen whether Congress will issue a new eviction ban, or whether President Biden will address the issue via executive order.

Position Realty
Office: 480-213-5251

How to Screen a Tenant Who Does Not Have a Social Security Number

Landlords to Take a Different Tact with Tenant Screening Without a Social Security Number

Some states, such as California, prohibit a landlord from inquiring about a tenant’s or prospective tenant’s immigration status or citizenship and requiring proof of legal residency or citizenship as a prerequisite to renting.

A SOCIAL SECURITY NUMBER IS NOT REQUIRED TO RUN A TENANT SCREENING REPORT. With Position Realty we don’t only pull a credit report but we also run a tenant screening report. Call us Today!

The law does not prohibit a landlord from requiring documentation necessary to verify a prospective tenant’s identity or financial qualifications to rent, it may be necessary for a landlord to find other ways to screen a prospect who has no credit.You may want to decide to screen using personal references, and independent income verification.

According to a spokesperson for a national screening company, a social security number is not mandatory for a credit check. You can order a credit report with a name and address. However, when the prospect does not have a social security number, you are highly likely to get a “no hit” or “no report available” response. Before a person is noted by the credit bureaus, a file has to be created. The landlord’s act of requesting a report may be the very thing that initiates this person’s credit history. Still, ordering a tenant credit check may be worth a try to see what information might have been reported earlier.

Other Reports Available

  • A tenant background checks does not require a social security number. A full name and date of birth are crucial for determining if you have the right information.
  • Eviction reports are available without a social security number.

Unfortunately, you cannot receive a PATH report, the address history, which could create a hardship when cross-checking criminal and eviction reports. There is no doubt that a social security number is an important identifier when weeding out duplicate names.

Position Realty
Office: 480-213-5251

Tenant Rights to Smoke Cigarettes or Marijuana in Rental Units

There Is No Absolute Right to Smoke

Tenants don’t have a universal right to smoke in their rentals. There is no law, either state or federal, that provides people with the freedom to smoke when and where they want. Nor are bans on smoking discriminatory: State and federal laws prohibit discrimination on the basis of certain attributes (such as age and national origin), but being a smoker isn’t one of them.

In fact, states, cities, and the federal government can place restrictions on all types of smoking. However, the laws regarding how, what, and where people can smoke vary.

Federal Smoking Laws

The federal government has the power to regulate almost any substance you might consider smoking, including tobacco and controlled substances such as marijuana.

Tobacco. Smoking tobacco is legal under federal law. The federal government doesn’t restrict its use in private rentals but does restrict it in public housing. The U.S. Department of Housing and Urban Development (HUD) requires all public housing agencies (PHAs) to prohibit certain tobacco products:

  • in all indoor areas (including individual units) and
  • all outdoor areas within 25 feet of a building.

HUD makes all PHAs ban the use of cigarettes, cigars, pipes, and water pipes but allows PHAs to decide whether to prohibit e-cigarettes. Each PHA can also decide to be entirely smoke free or create stricter anti-smoking rules than HUD’s. No matter what, if you live in public housing, you won’t be able to smoke in your unit.

Marijuana. Using and possessing marijuana for any purpose (including medical reasons) is illegal under federal law. Because it is a banned substance, using it anywhere—even in the privacy of your rental unit—exposes you to the possibility (even if remote) of being charged with a federal crime.

State and Local Smoking Laws

States and cities have the power to pass laws and ordinances that protect the health and safety of the public. This power includes the ability to restrict or ban smoking in rental properties.

Many states and cities have laws that prohibit or limit smoking in or around multiunit buildings due to the fact that smoke migrates so easily across shared spaces. In some areas, even buildings with as few as two units are considered multiunit for these purposes. Often, if the law doesn’t ban smoking altogether, it prohibits it in a certain percentage of units or in shared spaces such as common areas and parking lots. It’s also possible for a state or city to pass a law banning smoking in all rental properties—even single-family homes.

Most state and local anti-smoking laws clearly define what activities are considered smoking. For instance, a law might prohibit the use of pipes, cigars, and cigarettes. When a law is unclear about the definition of smoking, though, it’s probably safe to assume that it applies to anything that involves lighting or heating and inhaling the substance. Many anti-smoking laws also apply to vaping and using electronic smoking devices such as e-cigarettes.

Marijuana. If marijuana is illegal in your state, state and local anti-smoking laws definitely apply to it. If, on the other hand, marijuana for medical or recreational purposes is legal in your state, you’ll need to look at the relevant statute or ordinance for guidance. Some anti-smoking laws carve out an exception for smoking medical marijuana. Others define “smoking” as involving, or even define “tobacco” itself as, any plant matter that can be smoked. Many others are silent on the matter. To find out what the law is in your area, do an Internet search for “anti-smoking laws” or “smoking ban” where you live, or contact your city manager’s office.

Although landlords who manage properties subject to laws that limit or prohibit smoking should attempt to inform tenants of the rules, it’s the tenant’s responsibility to be aware of and comply with the law.

Landlords Have the Right to Restrict Smoking

Even when there’s no applicable anti-smoking law, landlords can limit or prohibit smoking anywhere on the rental premises, including individual units. Health concerns about secondhand smoke aside, landlords often prohibit smoking in an effort to limit fire hazards on the property, reduce fire insurance premiums, and avoid stains and odors. Landlords might also prohibit smoking to avoid lawsuits—tenants have sued landlords who allow smoking on various legal grounds, such as:

  • nuisance (for example, odors from smoking annoy other tenants) and
  • breach of the duty to keep the rental habitable (for example, units subject to secondhand smoke being uninhabitable because of health concerns).

Landlords typically inform tenants of a no-smoking policy or smoking restrictions through a clause in their lease or rental agreement. Most likely, such a clause applies to smoking of any sort, not just tobacco, but if you’re not sure, ask your landlord—preferably before you sign anything. However, even if your lease or rental agreement doesn’t mention smoking, you should familiarize yourself with any state and local smoking laws, as they might apply regardless of what’s in your lease.

Can a Landlord Evict a Tenant for Smoking?

A clear no-smoking policy prohibits all forms of smoking, including smoking marijuana for medical reasons. A landlord who has included a no-smoking policy in a lease or rental agreement can terminate the tenancy of or evict a tenant who smokes. When the no-smoking policy is part of the rental’s rules and regulations (but not incorporated into the lease or rental agreement), the landlord might only be able to terminate the tenancy or evict if the tenant repeatedly violates the rules.

Landlords might also be able to end a tenancy or evict based on a lease’s or rental agreement’s “illegal activity” clause. Again, under federal law, possessing and using marijuana is a crime. Whether a landlord will be able to evict a tenant for smoking marijuana based solely on the illegal activity clause depends on the circumstances. Many judges won’t evict when the tenant doesn’t have a history of breaking the law and the illegal act is relatively minor (especially if marijuana is legal under state law).

If you plan to smoke in your unit, it’s best to find out the smoking policies before you sign a lease or rental agreement. If a landlord tells you that you’ll be able to smoke in your unit, make sure you get that statement in writing. Otherwise, don’t enter into a lease or rental agreement knowing that you’re going to violate the no-smoking rule. Hold out for a rental that meets your needs—the risk of legal hassles or even eviction just isn’t worth it.

In the last election in Arizona, it was approved for adults 21 and over to possess up to one ounce of marijuana and for adults 21 and over to grow up to six plants per household.

Position Realty
Office: 480-213-5251

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