If you currently are roommates with your tenants, Podcast Host, Andrew Schultz, gives his best tips for creating a solid landlord-tenant relationship.
What are the best methods for presenting and signing a lease agreement? Listen in to discover the most popular methods we have seen.
Last, but not least, we’ll chat about providing appliances in your rentals. Is it a must? Find out now.
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Andrew Schultz: (00:00)
Hey everyone. Welcome back to another episode of the Rent Prep for Landlords podcast. This is episode number 353. And I’m your host, Andrew Schultz. On today’s episode, we’re going to be talking about different methods. Use to sign rental contracts, tips for living in the same rental as your tenants, and providing appliances in rentals. Is that a must? We’ll get to all that right after this.
Voice Over: (00:24)
Welcome to the Rent Prep for Landlords podcast. Now your host Andrew Schultz.
Andrew Schultz: (00:29)
Before we jump into today’s episode, don’t forget to check out the Rent Prep for Landlords Facebook group. It’s a great free resource for you to network with housing providers from around the country. And if you have a question or a situation that you’ve never dealt with with over 12,200 members, chances are someone in the group has been there before and can lend a helping hand if you haven’t checked it out yet, do it today over at facebook.com/groups/rentprep. And don’t forget to mention the podcast when you’re answering the questions. So we know how you found us. water
Voice Over: (00:57)
WaterCooler wisdom, expert advice from real estate pros.
Andrew Schultz: (01:04)
Our first water-cooler wisdom this week comes to us via the Rent Prep for Landlords Facebook group. Let’s go ahead and jump right in here for new tenants. How do you handle the contract signing? Do you email the contract to the tenant for them to look over prior to signing and then meet to sign it? Or do you go over each detail on every page in-person with them? What’s your preferred method? So we moved to mostly a digital format for signing leases several years ago, and I can’t see a reason for us to ever, ever go back. It just saves so much time and it’s so much easier than going ahead and scheduling an appointment and meeting somebody at the property and, you know, going over the lease line by line with them and things of that nature, you know, it’s much easier to send it in a digital format and we have found that that way tenants have as much time as they want to sit and review the lease before they sign it to come back to us with any questions before they sign up, whatever the case may be.
Andrew Schultz: (01:57)
I will mention that we do have our tenants initial the bottom of every page of their lease, as well as some specific clauses in their lease so that they can’t turn around and come back to us six months down the road and say, well, I never signed that page, or I didn’t know that was a part of the lease. Well you did, because your initials are right next to it. So there’s really not a way that you can say that you didn’t see it. Um, if you put your initials on the page. So the one nice thing about digital lease software or digital signing software is depending on the software that you use, you may actually be able to see the date and time that they originally opened the document as well as when they sign the document. So if you see that it was 30 seconds from the time that they opened it until the time all the signatures were on the page, okay.
Andrew Schultz: (02:38)
Maybe it’s time to have a conversation with that tenant and say, did you actually read the document before you signed it? And then maybe it’s time to set them down and actually run through it page by page or section by section clause by clause whatever’s most convenient for you. That’s something that is worth taking a look at just to make sure that the document was actually read and not just click, click, click, click, click all the way through so that they could move on to the next thing they had to do that day in personally signings do work well. I’m not going to take that away from an in-person lease signing, especially if you want to spend a lot of time discussing the lease with the tenant clause by clause, or if you need to maybe receive a payment at the same time for a security deposit or something along those lines, you know, there are times when in-person signings do make sense.
Andrew Schultz: (03:20)
You may just have a tenant. That’s not comfortable doing a digital lease signing. There are still people out there that don’t want to use digital signing products or don’t feel comfortable with it or whatever the case may be. So paper’s always an option that’s on the table. Digital is just our preference. So, you know, you may have a situation where you have a tenant that is looking for that paper copy of the lease. They actually want to physically sign the document. They don’t want to do it digitally, you know, have some sort of a plan in place for tenants that do want to do that physical-digital, excuse me, that physical signature on the actual lease itself. But we found that overwhelmingly the bulk of the tenants that we’ve interacted with in the last couple of years since we’ve gone straight digital, most people seem to prefer the digital format.
Andrew Schultz: (04:02)
We’ve only had a couple of people actually request a, a physical document for signature. I will say that we’re well past the days of faxing things back and forth. I mean, realistically speaking, even if somebody wanted to print a copy of the lease off and physically sign it and then send that back to you. If they know how to take pictures of each page with their cell phone, they can create a PDF using, uh, an app like cam scanner or anything along those lines that actually take a digital image and convert it over to a PDF. It’s, it’s pretty easy to make something into a digitized copy of a physical document at this point, even if somebody wanted to do a physical lease signing. So you do have some options that way as well. There was one management company, not in my area here in New York, but I believe they were in California, that they actually took their lease document and did a YouTube video explaining every clause of the lease so that if a tenant wanted to, they could sit and watch that video right along with a copy of their lease and have probably 90 to 95% of their questions answered before they even have to go back to the property manager and ask questions about the lease.
Andrew Schultz: (05:06)
So that’s an even an option if you’re doing a large number of units where it makes sense to sit and record a video, explaining the lease clauses and things of that nature, that might be an option that makes sense for you too. It’s just a matter of what sort of scale are you working off of? You know, if you have one door, okay, maybe an in-person lease signing makes sense. If you have a hundred doors, okay. Maybe an in-person lease signing no longer make sense. At that point, you’re going to want to look to some sort of a, a digital option for your signings. So, uh, as of this recording, I will tell you that DocuSign has a free 30-day trial. DocuSign is pretty much like the gold standard of digital signatures currently. And it has been for a long time. Panda doc is another one.
Andrew Schultz: (05:46)
They have a 14-day trial, and I believe HelloSign also has a 30-day trial. Some property management softwares will also have digital signing already integrated. He’ll just have to check and see what sort of options are available for you out there. But even if this was something that you wanted to try out and you didn’t want to commit to, there are a few different options out there to try some digital signing services and see which one you’re most comfortable with before you commit any sort of, you know, cash resources to it essentially. So something to consider, you know, we moved to digital a couple of years ago, it’s made the world a lot easier. I’m very, very glad that we’re past the point where we’re faxing things back and forth because now we can actually read things. Um, and again, the one thing I will mention is even if somebody does want a physical document printed out and they want to sign a physical document, it’s very easy.
Andrew Schultz: (06:33)
If you, even, if you don’t have a scanner, you can download one of those programs onto your smartphone, like cam scanner. And it’s so simple to use. You literally take a picture of each page, it resizes it so that the document is, you know, just the page. You can zoom in to make sure that your skin is nice and clear and legible, convert it to a PDF, send it to Dropbox, send it to Google drive, send it to your email. Whatever’s most convenient for you for longer-term storage or whatever the case may be. So there are options out there even if you still do operate in the physical paper world, to make that into a digital document that you can upload into your computer for, for better recordkeeping, our next water cooler wisdom comes to us from over on the landlord. Subreddit. This is a pretty interesting one on what to do when you plan on living in the same rental as one of your tenants, with the same building as one of your tenants, you know how to make that relationship work well, uh, let’s go ahead and jump right in here.
Andrew Schultz: (07:26)
I will be moving in the upper unit while renting out the lower unit. I met the lower tenant. He is paying rent and he seems like a nice guy. He lives with his retired mother, as he takes care of her. Their lease ends at the end of the month, and I definitely want to increase the rent as it is expected. Uh, the previous owner made it low rent because she knew she was selling and wanted to help him out. What are some beginner tips that you can pass on to me? What are some things I can do when I first move in any checklists or advice? Thank you in advance. So you have a couple of different questions here. The first one is about raising rent. So I think we’re going to tackle that one first raising rent is a pretty straightforward process, but there may be some differences from state to state on timelines and things of that nature.
Andrew Schultz: (08:09)
So double-check your state laws and make sure that you’re in compliance with whatever they have in place first and foremost before you jump any further. So for instance, here in the state of New York, as of June or July 2019, when they passed the HS TPA laws, the new rule for New York state is 30, 60 or 90 days notice as required based on the length of tenancy before you can increase rent, increase rent 5% or more, I should say. So our process now starts 90 to 120 days out, which seems like a long time, but keep in mind that that is largely due to our state’s laws before those changes in 2019, our process typically started about 60 days out when we would start contacting tenants to find out what their game plan was. Honestly, I don’t having the extended lead time. It’s kind of nice for our knowledge to know who is going to be coming up for lease renewal, um, whether or not they’re going to be staying or whether or not we’re going to have to prepare to turn that unit.
Andrew Schultz: (09:06)
It’s made our processes a little bit smoother actually to have that extended timeline. So, you know, maybe 60 days was a little bit too short before it does just seems to work better for us now. So I guess that’s one change that I don’t necessarily have the issue with. Um, we typically start the process with a call to the tenant, letting them know that they’re coming up onto the end of their lease, letting them know exactly when the end of their lease is, and asking them if they plan to stay. We also let them know right at the onset of that phone call, what the rent is going to be in the following year. So they know if they want to stay that, okay, I need to plan on a 3% or a 5% rent increase or whatever the case may be so that they have all of the information that they need right on the front end to make a decision as to whether or not they plan to stay or go.
Andrew Schultz: (09:48)
So we like to make that phone call so that the tenants have a few days to kind of make a decision as to what they want to do. Um, making sure that we get a response before that 30, 60, or 90-day point where we’re expecting to get an answer for them or what we need to do to be compliant with our state laws essentially. So where our real target is to make sure that we get our notice out the door, whether it’s a new lease or whether it’s a non-renewal notice with a set of move-out instructions, whatever we’re trying to do, we want to make sure we’re getting it out the door prior to that 30, 60, or 90-day requirement here in our state. So if the tenant does decide that they want to stay in the unit, it’s very straightforward. You send them a new lease and you have them sign it.
Andrew Schultz: (10:28)
Given that in this particular instance, this is the first time that you will have done a lease with this tenant. You may want to have a conversation with them. I know we had just talked about that in our previous segment, but you may want to have a conversation with them about your lease versus the previous owner’s lease so that they understand that they’re going to be operating under your lease terms and conditions, not previous property owners, once that new lease is signed and goes into effect, there’s all sorts of situations where a previous owner has operated a property under a different way that you choose to operate the property. And the tenants need to understand what’s expected of them. What’s being provided. What’s not being provided things of that nature. So in a circumstance like this, where you’re presenting a new tenant, I think, excuse me, an existing tenant with a new lease, with a lot of different terms and conditions.
Andrew Schultz: (11:14)
That’s one of those situations where an in-person meeting might make more sense. Um, you may still not need to, you may be able to send it over digitally and just tell them over the phone. Look, there’s a lot of changes you need to read through this before you sign it. Ultimately it’s up to the tenant. If they choose to sign that lease or not. So it’s not something where you’re forcing them to sign it. It’s their option. They have the option to stay and sign the lease, or they have the option to move at the end of their existing lease term and just find a different place that’s more palatable for them. So it’s ultimately up to the tenant at that point. If the tenant decides, no, they don’t want to stay after the end of their lease, we send them a set of end of lease instructions for cleaning, how to go about completing your move out, you know, how to deliver keys, et cetera, et cetera.
Andrew Schultz: (11:58)
We make sure that the move-out date and time are in that letter. Some states require you to issue a termination of tenancy notice even if the tenant is the one notifying you, that they intend to move. Typically we ask tenants to put it in writing either in an email, um, or even a text message because our text messages are saved right into our management software. We want something in writing from the tenant, indicating that they have chosen a date and that they are planning on moving out of the unit. If your state requires you to send a termination of tenancy notice, even if the tenant is the one who’s initiating the termination, you may be able to send that at the same time that you send your move-out instructions letter, and you might be able to kill two birds with one stone that way.
Andrew Schultz: (12:37)
So now moving onto the second part of the question for as when you personally move in, there are a few things that I recommend doing, and these are things that it’s not an exhaustive list by any means, but these are three things that I always see people forget to do, and it just creates a headache. So if you can remember to do these three things, I think that it’ll get you at least started in your new home. The first thing I’m going to mention is get your guests, electric and water meter readings. As soon as you move in, if you don’t have them already and then call them in establish your new utility counts as necessary, this gets overlooked all the time. It’s one of those things that eventually you just show up to your new home and you have no power, or you have no heat.
Andrew Schultz: (13:14)
It’s certainly not an ideal situation. Make sure that you’re doing what you’d have to do to establish your new utility counts. As soon as you move into the building, uh, if not sooner, in some instances, such as water, the next thing I will mention is to get the make model and serial numbers on all the major mechanics and appliances, not just in your unit, but also in the tenant’s unit, if the appliances belong to you. So the things that I think that you need to mark down the make model and serial on, I would do it on your furnaces, your hot water tanks, your stoves, refrigerators, dishwashers washer, and dryer. If you’re including it in the rent, whatever the case may be, this makes it a lot easier for you to search for parts or to call in for repair. When the time comes pretty much every appliance repair company is going to ask you for the make and model.
Andrew Schultz: (14:00)
Some of them want the serial number as well. When you call in for a repair because that’s what they need to basically be able to figure out. If they’re going to be able to service you or not. Some appliance companies, won’t service certain appliance types. You’re gonna want to know that stuff when you go to make those phone calls. So that’s definitely something that’s super easy to take care of. It only takes a second to take a picture of the make model and serial plate in the appliances and in your mechanics. And it makes your life a lot easier. If you ever need to call in for a repair. The last thing I’ll mention is to check your gutters, downspouts, and extensions, to ensure that water isn’t sitting at your foundation walls and that it’s able to get off the roof and down to ground level.
Andrew Schultz: (14:38)
This is one of those things that often gets ignored as a preventative maintenance sort of a thing. And then you wind up with major issues as a result of it. You know, getting water away from the base of your home is super important. Water almost always causes. There’s really not even an almost there water will always cause issues. If you let it sit around the base of your home or around your roofline, or really anywhere, the goal of getting water away from your home should be a top priority. So make sure that your gutters, downspouts, and extensions are taken care of. You don’t want that water sitting around your foundation walls or around your roofline. You’re going to wind up with headaches after all that start knocking off all those repairs from the home inspection. I know that you had a home inspection.
Andrew Schultz: (15:17)
I know that you didn’t waive your home inspection contingency. Don’t waive home inspection contingencies. If there’s one thing that I can advise everybody of as a real estate broker, don’t waive your home inspection contingencies. I know it’s tempting when the market is crazy, don’t do it. Don’t fall victim to that trap because you don’t know what you don’t know ultimately, and you’re buying that asset. If you don’t have any idea how the asset, what the true condition of the asset is, don’t buy the asset. If you are in a market where you have to waive home inspection contingencies, just to get your offer accepted, maybe it’s time to pump the brakes a little bit and wait for the market to calm down. There’s no expansion strategy that is worth losing a ton of money on a bad investment because you didn’t do a home inspection once you own it, you have to fix it, or you have to find somebody that’s going to buy it with the defects in place. So just something to keep in mind, as you are looking to expand your real estate empire. I know we’re off-topic there, but please, please, please. Don’t waive your home inspection contingencies. I guarantee you that most real estate brokers and probably most home inspectors would also agree with me on that one. So that’s something to keep in mind as you’re looking to expand your real estate empire.
Voice Over: (16:32)
Forum quorum, where we scour the internet for ridiculous posts from landlords and tenants.
Andrew Schultz: (16:41)
So this week’s forum quorum is also going to be a two-parter. Um, it’s kind of an interesting one. This one also came to us via the Rent Prep for Landlords Facebook group. And we build it in the intro as being about appliances and rentals. But realistically, there’s also a question here of when is a red flag, a red flag. And when is the time to walk away from a potential renter for an apartment, let’s go ahead and jump right in here. I provide all appliances, including washer and dryer in my rentals, but I consider them courtesy items. So if I get someone who abuses set appliances, I can refuse fixing them and make them fix it themselves. I’ve never had an issue with this in my lease before, but now an applicant is upset and says that the refrigerator and other appliances should be standard inclusions and that she will have her lawyer look over the lease.
Andrew Schultz: (17:26)
Fine. I’m not worried, but is there a law stating we must provide appliances that I’m missing? I’m in the state of Texas, I’ve already approved the applicant. Otherwise, I would pass on her just for the lawyer threat. And again, this one comes to us via the Rent Prep for Landlords Facebook group. So you have two different issues at play here. First, different states have different laws on what needs to be included in a rental. For instance, in some states air conditioning, as a requirement in New York state, for instance, air, conditioning’s not a requirement. So the laws do vary from state to state as to what needs to be included for a rental in order for it to meet habitability requirements. I don’t know what the law is in the state of Texas. I’m sorry. I didn’t spend the time to do that research. I can tell you that in the state of New York, I personally don’t know of any requirement to include a stove or refrigerator.
Andrew Schultz: (18:11)
I’m also not an attorney and you should do that research on your own. So in fact, we typically don’t actually include a stove, a refrigerator until we hit a certain rental threshold here, at least in the Western New York region. Once you get to a certain price point and at least in our market, that price point seems to be around a thousand dollars a month. That’s kind of when you, there’s an expectation that a stove refrigerator are going to be included, you know, maybe a dishwasher depending on how the home is set up or whatever the case may be. But there’s a threshold at least here in our market. And we don’t have to provide a stove, a refrigerator, um, period, end of discussion, at least to the best of my knowledge, but we certainly don’t provide them on most of our low-end rentals, regardless of state law.
Andrew Schultz: (18:53)
I’m of the opinion that if you’re supplying appliances and you’re charging an appropriate rent for those appliances to be included with the rent, you need to cover the repairs of those items. If they are damaged, or if they fail, you need to be responsible for them. We literally just rented an apartment here in Western New York for $250 a month, more than typical because it had a stove, refrigerator, and dishwasher in place. So check your market. I understand that appliances can be a hassle, but it might be a hassle that’s worth taking on for you, just depending on what the conditions are in your market, depending on the market, you may not be able to rent an apartment without a stove, refrigerator, and dishwasher, simply because everybody else has already including those. So that’s something that you might want to factor in depending on the market that you’re operating in, whether you even need to include stove, refrigerator, and dishwasher, or whatever the case may be, understand what your market is.
Andrew Schultz: (19:44)
That’s going to help you decide what you need to include, what you need to account for, and things of that nature. If you don’t want to be responsible for the appliances, simply don’t supply appliances and reduce your rent. It’s as simple as that, if you don’t want to be responsible for the stove or the refrigerator breaking just don’t include them in the unit and move on. If you’re not required to under some sort of a state law, that might be the route that’s best for you. If you want to keep everything easier, we’ve done as, as appliances before with a washer and dryer once or twice, and the second anything happens, it’s always an argument. Doesn’t matter what the lease says. Doesn’t matter how many initials are put on that page. As soon as something goes wrong, where an appliance provided an as-is condition and something breaks, the tenant will immediately call and start screaming and demanding that that appliance be fixed.
Andrew Schultz: (20:33)
It’s not worth the headache, even if you’re allowed to do as, as appliances in your state. My recommendation is don’t do it. Get the appliances out of there. If you don’t feel like dealing with the headache that might result from the appliances. One thing I will mention is that you should add a clause to your lease about not being responsible for any food loss or any damages caused as a result of an appliance failure. It does seem to me that every time we have a refrigerator that goes bad, where we are, the one supplying the refrigerator, those tenants have always just bought somewhere between 300 and $500 worth of food, right before the refrigerator dies. It’s one of those things that that should be very, very clear. As a matter of fact, that’s one of those things that if you’re supplying a refrigerator, you might want to have that be one of your initial to clauses that tenants understand, Hey, if my food gets ruined because the refrigerator dies, they’re not going to replace it.
Andrew Schultz: (21:24)
That’s the thing that a renter’s insurance policy will typically cover. Some of them will even cover like lost food from a, from a refrigerator loss or something like that with no deductible. So that’s something to keep in mind for a tenant. If there’s tenants that happen to be listening, that’s why renter’s insurance is such a good idea. So something to keep in mind there, I will mention there is a longer article over on the rentprep.com blog, title Do landlords have to provide appliances. If you go to the Rent Prep website in the upper, upper right-hand corner, there’s a little magnifying glass just type landlord appliance. And it should be the first article that pops up. Let’s move on to part two of this. And this is actually where we should probably have been spending the majority of our focus. Any tenant that wants you to make changes to your lease agreement.
Andrew Schultz: (22:07)
The answer to the question is affirm. No, keep in mind that being difficult is not a protected class. And until both parties signed the lease, that apartment is still available for rent. At least in our office, you can move on from that applicant at this point, still the tenant never needs to mention even having an attorney review the lease, they could have just done it and come back to you with questions. It’s probably the way that I would do it. If I was the tenant in the scenario, and I didn’t feel comfortable with something before I was signing it. But to tell you outright, I’m going to have my attorney go and review those before I sign it, I would call it a red flag. Uh, and the reason I say that is not because they want to have their attorney review it, but because of the method that they chose to bring the topic to your attention, if you will, I think there were probably better ways to do it.
Andrew Schultz: (22:55)
And I feel like this is just a little bit of a red flag. Again, not because they want to have their lease reviewed. I encourage people to sign, um, excuse me. I encourage people to have any legal document that they’re about to sign reviewed before they sign it so that they understand what they’re signing. No problem with that. My problem is simply with the execution as to why they chose to go the route that they went. So if you decided that, okay, this is too much of a red flag, I just want to move on to the next applicant. You don’t have to be rude about it. Just let the applicant know that you are sending your offer for the home or the apartment, and then make sure that you followed your tenant screening guidelines to a T, and that there are no gaps in your screening that could be looked at as a potential fair housing violation in the event that the tenant decided that they wanted to try to pursue that route because they felt that whatever you were doing was discriminatory.
Andrew Schultz: (23:43)
It’s not really, you’re just not looking to get into a business relationship with somebody that you feel is going to be argumentative, because they’ve already displayed that to you on the front end. So that’s something to keep in mind. That’s how I would handle it. At this point, that tenant has raised a red flag to me. I would probably resend my offer for the apartment. Um, just based simply on the fact that they chose to be, I don’t know. I don’t know as though I want to call it combative because we’re, we’re interpreting a lot from a Facebook post here, but it sounds to me like this might’ve been a little bit more combative than it was discussion. Uh, and for that reason, I would probably consider taking the real strong look at rescinding my offer to that tenant for that apartment Rent Prep has recently released its guide on all things.
Andrew Schultz: (24:25)
Tenant screening, learn more about screening costs, what to look for in credit reports and background checks, and so much more visit rentprep.com/blog to grab your free copy of the official guide today, before we wrap up today if you’re a landlord or tenant in the state of New York, and you’re looking for information on the New York state rent relief program, we just published a video over on the Own Buffalo, YouTube page about that exact topic. You can find that by searching for Own Buffalo on YouTube or head on over to whatsdrewupto.com. And there’s a link to that video, right at the top of the page. That pretty much wraps things up for this week’s episode of the Rent Prep for Landlords podcast. Thank you all so much for listening. We truly do appreciate it. The goal with the podcast is to help as many people as possible make educated decisions when it comes to real estate.
Andrew Schultz: (25:11)
And you can help us to reach that goal. If you heard anything in this week’s episode or any other episode that will help someone, you know, do us a favor and share it with them. If you’re looking to get in contact with me, I can be reached over at whatsdrewupto.com from there, you’ll find links to everything going on with me over at Owned Buffalo, as well as other projects that we’re working on. In addition to the Rent Prep for Landlords podcast, I also host a weekly show called ask a property manager. You’ll find a link to my YouTube page over at whatsdrewupto. And then from there you can access the growing catalog of 60 plus episodes. Take a look and don’t forget to subscribe. If you’re looking for top-tier tenant screening services, head on over to rentprep.com, there are multiple products to choose from including a tenant-paid option. And if you’re over 50 doors, ask about the enterprise-level programs and pricing. We’ve been enterprise users of Rent Prep for years now, over at Own Buffalo. And it’s definitely changed the way that we screen our tenants. Check it out today over at rentprep.com. Again, thank you all so much for listening. We’ll be back in two weeks with an all-new episode you won’t want to miss until then. I’m Andrew Schultz with ownedbuffalo.com for rentprep.com. And we’ll talk to you soon.