Feb 24, 2014

Not sure if your tenant is planning on staying in your rental?

You have a new tenant interested in your property, and the current tenant is nearing the end of their lease.  You need to plan well, so you dont experience a lapse in your income.  What is the best course of action?
Our TIP:  Contact your existing tenant about 60 days before the end of the lease and find out their intentions. 
Having a signed agreement to vacate, will help you as a property manager.  If the tenant does not vacate, you have further proof of their stated intentions if you end up in a dispute.  If the landlord does not like the existing tenant and wants to end the tenancy at the lease term, the landlord may have to take legal steps to re-gain possession.  It is good  to know well in advance, so you can plan your strategy.  
On the other hand, if the landlord likes the existing tenant, it may be beneficial to negotiate a new full-term lease or renewal.  Then you are not left to guess when the tenant may decide to give notice and move out.
Another option to consider is having your legal adviser review your standard lease agreementIf necessary, you can add in any available options for hold-overs.  There may be many provisions you forgot to include on the original lease.  For example: A provision that allows a landlord to increase the rent once the tenancy goes month-to-month? Or an option to have the lease renewed for a new term, for instance one year, rather than go month-to-month?
If you pursue information in advance, and keep on top of your leases, it will benefit your income.

Feb 18, 2014

You might be making BIG mistakes as a landlord!

As a landlord, you have quite a bit to manage.  There are several very important things that a landlord cannot overlook, through out a tenancy.  Here are a few common mistakes one might make at a property manager.

1: Delaying time!

As a property manager or landlord, you might often choose to let late payments extend passed a due date. Landlord's who delay sending default notices and commencing evictions action often risk enduring longer "rent-free" periods than if the landlord immediately responded to the first delinquency. A landlord is generally better able to obtain overdue lease payments if the landlord promptly contacts the delinquent tenant to work out payment details. In some instances, the landlord may obtain full payment. In other circumstances, the landlord may make concessions by providing a lease modification (i.e., lower rent payments; forbear a portion of future rent payments; etc.) so the tenant will agree to remain in the premises. In yet other situations, the landlord may need to pursue eviction proceedings. It is important to you bottom line, to attempt to minimize your risk.
2: Holding off on the eviction process, while negotiating with your tenant.
It is necessary to pursue eviction, purely for business purposes. As a landlord, you must increase your leverage, as you start the negotiation process. It provided a landlord the ability to dangle a carrot in front of his tenant, and create motivation for change! If the tenant cooperates in the negotiations and pays at least some of the past due rent, the tenant will obtain a lease modification. If the tenant is does not cooperate, the tenant will be evicted. Assuming the tenant cooperates and a settlement is reached, the eviction may be cancelled, but a landlord cannot obtain a refund for court filing costs. Two other benefits of starting an eviction while negotiating with a tenant is that (1) the proceeding give you a firm deadline for an agreement, and (2) if negotiations break down, the tenant will have to vacate the property. 
3: Ignoring your tenants imminent bankruptcy.
As soon as a tenant files for bankruptcy, all legal proceedings against the tenant must be immediately halted. Pending lawsuits and eviction proceedings are also included! As a landlord, you must begin eviction proceedings against any tenant that is expected to declare bankruptcy. Once in bankruptcy, a tenant may be able to remain in the property rent-free for up to 60 days. It is usually far less costly to pursue an eviction proceeding than to be enveloped into a tenant's bankruptcy action as the landlord and/or creditor. IMPORTANT! Eviction proceedings can take several weeks to complete.

Feb 14, 2014

Potential tenants, and a few red flags.

There are certain things that should alarm you, as you interview prospective tenants. These items are not necessarily deal breakers, but they are items that should concern you and cause you to investigate further.  Here are a few things that you should watch for:

Potential tenant is concerned about a credit check.
A tenant who is hesitant to consent to a credit check is doing so for a reason.  It might be a poor credit score, massive debt, a judgement against them, bankruptcy filing or even a history of evictions. You cannot run a credit check with out the tenants consent, IN WRITING!  You should advise the tenant that failure to consent to the credit check will result in their removal from the applicant pool.

They have been evicted before!
If you find that your prospective tenant has a history of evictions, either by running a credit check or by speaking with a former landlord, you should run the other way. Evictions can be filed for a variety of reasons, but the most common reason is for nonpayment of rent. You want to avoid renting to tenants with previous evictions because these tenants were knowingly violating the terms of their lease agreement, but refused to leave until they were legally forced out.

The tenant has a Criminal History.
States don't always allow you to discriminate against your potential tenant if they have been convicted of a non-violent crime.  Make sure you know your rights, and the rights of your tenant in this area.
As an example: You could make a strong case to refuse to rent to someone who has been convicted of dealing drugs or is a registered sex offender.   It  could put your other tenants in jeopardy. You may have a harder time refusing to rent to someone who went to jail for unpaid parking tickets.

The application is full of holes, or lies.
It is possible to make a mistake when filling out an application.  And you may be lenient with those things.  But a land lord must be wary of any potential tenant that blatantly misrepresents themselves on their application.

Verify their previous W2's.  Call their employer.  Confirm their work experience, and pay rate.  Check with previous land lords, and contacts listed on their application.  Confirm that the identification provided to you in authentic.

Make sure you inform your client that you will be doing all these things, and give yourself time to do so!  If you find this process too tedious, you might consider taking THIS advice.

Feb 13, 2014

Why Hire a Property Manager in Arizona?

As an owner of an investment property, you are probably all about saving money.  But lessons learned in business teach us that there is a time for pinching pennies, and a time when we should not

A professional property manager is worth their weight in gold, for a number of reasons:
  • Property managers can be objective, when it comes to screening possible tenants.  It is rare that your manager will fall for a hard luck situation.   Property managers assess the income, debt, and other issues that your tenant has.  They will make an educated assumption, NOT BASED on emotions!  They will help you find tenants that have a greater likelihood of paying rent!
  •       Your property manager can coach you with regard to price, and has sometimes a greater ability to find tenants for you.  He likely manages multiple properties, and has a system of advertising already set up.
  •       Professional property managers play by the rules.  Because it is their vocation, they are often available to act when needed.  And know the current standards and laws required of them.
  •       Property managers have special accounts set up for holding escrow, and accounting for interest which under certain circumstances must be paid to the tenant.
  •       A good property manager has a very comprehensive lease agreement.  And will keep you from worrying wether or not you have included all necessary details on your lease.  That offers you far more protection as a landlord than using pre-printed forms online.
  •       Thorough inspections, both before move in and upon move out, are essential to a smooth transition.  Having an experienced, objective 3rd party to conduct these inspections and insure that the appropriate follow up paperwork is completed is a must.
  •       And finally, property managers have a wide variety of loyal service men and women, with whom they have good relationships.  They know what contractor, or carpet guy to call, when you are in desperate need of repairs.  They have invested time in finding quality craftsman, who will do the work they are paid for.  And if you have ever dealt with a poor quality contractor, you will appreciate leaving the hassle on your property managers shoulders.
Your property manager will probably charge you 10 to 15% of your monthly rental income.  If you value your free time, night times, and bottom line, a property manager might be worth your investment.

Feb 11, 2014

Why Was my Eviction Case Set for Trial?

1. What happens at the initial eviction hearing? 

On any given day eviction hearings are bunched into a 60 minute time frame.  It is not uncommon for 80 eviction hearings to be scheduled in a 60 minute block!  During these hearings the courtroom is packed with attorneys, their clients, tenants, and crying babies.  Thus, Judges are under necessity to move through each case as quickly as possible.  Additionally, the hearings move swiftly because often the defendants (tenants) don't appear at their hearing.

In this small allotment of time there is not time to take sworn testimony, allow for opening and closing statements, or review evidence.  So just because the case was set for trial it doesn't mean that they did anything right or that we did anything wrong.

2. Why would a judge set an eviction for trial?

If a Defendant (tenant) in fact appears at the hearing and denies the allegations contained in the Complaint, the Judge may set the matter for trial.
  • If the original eviction Complaint was filed for failure to pay rent a tenant might appear and too the judge that they are actually current on their rent. As mentioned above, the Judge does not have time during this block of time to hear either parties' argument, and he or she will set it for trial.
  • Another example is in the case that the Complaint was filed for breach of the lease agreement. For instance, if the signed lease agreement states that only two people may occupy the property. If the property owner finds out that there are 22 people living in the house he or she may file for an eviction based on the fact that the Tenants had more than the allowed number of occupants in the home; which is a breach of the original signed agreement. However, the Defendant (tenant) may appear and claim that the people in the house are just visiting. In this case the matter would be set for trial.

Feb 5, 2014

Tenants Possible Defenses During Eviction

Tenants will periodically fail to make rent payment or comply with the provisions in the rental agreement.  It is then up to the landlord to begin the Arizona eviction process. The Residential Landlord and Tenant Act, lay out important rules for a landlord to follow.

Landlords cannot begin an eviction without following specific steps.  Otherwise you might you may expose yourself to damages and give your tenant more advantages. For example, a landlord cannot deny access to the tenant, shut off utilities, threaten the tenant, remove the tenant’s personal belongings or take other action to forcibly remove the tenant without first giving notice and then obtaining a court judgment and order.

There are several defenses a tenant can use during an eviction trial, a few examples are;
  • Tenant made partial rent payment
  • Discriminatory Eviction
  • Retaliatory Eviction
  • Landlord is in breach of his obligations.
As an Arizona landlord you can find yourself in very emotionally charged situation. If you find this is your case then feel free to contact an experienced real estate attorney at 480-344-4035 or email cdunaway@davismiles.com.