In this week’s episode, Podcast Host, Property Manager & Business Owner, Andrew Schultz, chats about a ton of topics this week that landlords around the world are experiencing including:
What happens if a tenant finds mold in the rental unit? Yes, this is an extremely serious issue that needs to be resolved in a timely manner. Landlords, find out how to go about fixing the issue.
From tenants breaking up to switching up the lease to damaging property, we cover it all in this week’s episode. Listen in now.
Hi everybody. Welcome to the rent prep. June, ask me anything session. Thank you for joining us today. My name is Andrew Schultz. I’m the community manager here at Rent Prep. I’m also a licensed real estate broker with over 14 years of experience in the property management and rental property industries. I have with me today, Josh, from the rent prep marketing team. Josh, how are you doing today,
Andrew? I am doing well,
<laugh>. That’s good. Despite our little technical difficulties here,
Despite, despite always having some sort of, some sort of kink in the, in the cord here, um, yeah, I’m doing well. It’s always, always a pleasure. Uh, I get fired up when it’s, when it’s ama time. I love jumping on these with you. These
Are a lot of fun and we get a lot of really good questions too, which is kind of nice cuz it, it’s, it’s a little bit different cuz you’re getting something different every single month that we do one of these, the situations vary a little bit, the questions vary a little bit, right? So even if there’s like core knowledge that comes out of each one of these AMA sessions, it’s nice to, it’s nice to be able to see some different scenarios and walk through ’em as well.
Yeah, and I think, I think the last couple of months, um, you know, we’ve assembled some, some cool guests. The last couple months we had, uh, Katie on one of our, one of our senior screeners, and we had Chelsea on who’s, who’s our screening manager. So we’ve gotten some insight from some, from some different areas and, you know, the questions are, are changing mm-hmm. <affirmative> this month. Uh, for this one especially, I’m excited to go over some property management specific questions. Uh, you know, more of more of your strengths and sort of my, and sort of my strengths. So, you know mm-hmm. <affirmative>, I like that we’re always changing the topics up. It’s
Cool. Yeah, definitely. And, um, if anybody did not have a chance to watch the previous couple months, so this is June. So it was Katie, Katie was April, and she went over a credit and background check in depth. Yes. Yep. And then, um,
Was, or no, Chelsea was, uh,
She was May
And she went over an income verification report, which was really useful. So, I mean, obviously, I guess we’ll plug at the top of the show here. Rent prep is a tenant screening and background check company. They run credit checks, they run tenant screening, things of that nature. Obviously you could find a ton more information on the firstname.lastname@example.org. I feel obligated to, uh, to drop that in there at the top. And actually, since we’re doing our, since we’re doing our obligatory, I’ll start with my obligatory, I’m not an attorney. I’m not an accountant. Josh is not an attorney. Josh is not an accountant. And neither one of us work for you as a property owner. So if you hear something today or you get a piece of advice out of the show today, run it by your local team that understands your unique situation, your attorney, your real estate agent, your property manager, your accountant.
Those are the people that are going to be able to answer the questions best given your unique set of circumstances. We’re just a couple of guys on the internet. Granted, we both have some experience here, but, um, you definitely wanna make sure that you’re running any piece of advice that you get from, doesn’t matter if it’s bigger pockets or rent prep or there’s other Facebook groups out there. Like anything that you pull off the internet needs to be vetted by someone that truly understands your unique situation. So why anything that we say might sound real good, definitely talk to people that know your situation locally before you, uh, make any final decisions here
For sure. All right. Should we, should we jump right in here?
Sure. Let’s get into it.
All right. What do we got for the first question?
You give me a name and I’ll pull ’em up.
Let’s do, why don’t we start right at the top with, with Judith.
All right. Question from Judith. What is typical management fee per unit of a smaller or a small rent rental building?
So, I guess I can answer this from two different perspectives. Since I own a property management company, and actually, let me back up. For anybody that’s not aware, I actually am a licensed real estate broker and I focus predominantly on property management. So that’s where most of my knowledge comes from when I go to answer these questions. So as far as management fee, a typical management fee, there’s not so much a typical management fee because it’s gonna depend on the services that that property manager is offering. And that’s gonna vary. You know, they might have different plans starting at 7%, 8%, 9%, 10% depending on what level of service you want. The other thing to consider is if you have a lot of doors, um, you may be in a situation where there’s a discount available just because you have so many doors. So I can tell you that here in our office, our base management fee is 10% of the gross monthly rents collected. Um, we do offer some bulk discounts. Once you get above like 10 doors, we start offering a little bit of a bulk discount and things of that nature. But our base management fee is 10%.
Is that the normal structure for, for management fees? It normally comes, it just comes right from what you’re charging for rent.
There’s a lot of different methods out there in the marketplace nowadays. It used to be pretty much standard that it was a percentage of rents. Now there are managers that are doing hybrid models where they do like a smaller percentage, but there’s a base fee every month. Yes. There’s other managers that it’s strictly just a, a one-time charge or a one one charge no matter what. Mm-hmm. <affirmative>. So it really depends on the property manager and what their fee structure looks like. Um, so there is not a typical management fee structure. I will say that the other thing to keep in mind is don’t focus on just that percentage management fee. Think about the ancillaries that go along with it. Is the property manager charging you for tenant placement? How much are they charging you a markup on your maintenance? How much are they charging you an hourly fee every time they need to go out to the property?
How much? Right. So understand what you are signing before you sign it. Above and beyond just shopping for property management for a under, like a buy a management fee, you really need to understand what the fee structure is for that management company, because every company’s gonna be a little bit different. I won’t name names, but I have a competitor here in the Buffalo market that their base management fees lower than mine, but all of their maintenance services are provided in-house. So he’s making his profit margin on his maintenance. Yeah. And taking a little bit of a loss on the property management. So I will say that most people typically do shop for property management based off of that management fee, but it really does need to go a little bit deeper than that. So it’s, it’s more in depth of a question than what’s a typical management fee. It’s more of a what is this manager providing me and am I comfortable with what they’re charging?
Right. Okay. Good. All right, let’s go. This is, this is a longer one. Mm-hmm. But let, let’s tackle this question from, uh, Vandel who’s a, he’s a, a common contributor to the, the rent prep for landlords Facebook community page. Mm-hmm. <affirmative>. All right, here we go. He’s got Tennessee. Is it wrong to choose from a pool of applicants versus using the first come first serve method? I don’t find that the first come first serve method is fair to all. When I schedule showings, they are typically scheduled back to back in 20 minute increments. I recently had a showing where three people showed up to view the property. One was a single mother who came after she got off work. Another was a new, a newly retired senior, and the other was a newly college graduated young man who came after work. Let’s just stop right there. Mm-hmm. <affirmative> and, and tackle the first part of that question. So, is it wrong to choose from a pool of applicants versus using the first come first serve method?
Let’s start there. Um, I’m sorry, I’m just kind of skimming through the question here. There’s a lot of, yeah, there’s a lot of ancillary, there’s different here that doesn’t really pertain. Yeah. So it’s gonna depend on your state. Um, I did not get a chance to research this and see what the law is in Tennessee. I would assume that Tennessee being Tennessee probably does not have a first come, first serve rule. Mm-hmm. <affirmative>. Uh, but there are some states out there that have laws on the books that state that you need to consider your applications in the order that they were received. Uh, so check your state law first and foremost, check your state law and your local law to see if there’s something that would require you to process applications in the order that they were received.
So does that mean, does that mean that in the order they are, they’re received mm-hmm. <affirmative>, if they hit all of your criteria, then they have to be, then they have to be accepted,
Offered the apartment. Yep. Correct. Okay.
Yeah. So that’s, that’s typically how that type of legislation works. I cannot think off the top of my head of what states have that. I don’t think New York has it. As a matter of fact, I know New York doesn’t have it, um, or I would be responsible for dealing with it. So, um, but no, as of right now, New York, I do not believe is one of those states. Check with your attorney, obviously. Um, but yeah, check with your, check your state law to see if there’s anything that requires you to accept the first application, um, that meets your criteria. And I guess this is probably a good time to mention that you should have a set of written criteria that you’re following every single time. Um, and you can get a lot more information on written criteria from the podcasts, from previous AMAs, from the rent prep blog. We’ve talked about that a lot in, in depth about having a minimum selection criteria and following it each time. Um, but so it
Looks like off the top of my research here, it looks like Seattle is one of Seattle. Yeah,
I was thinking California to be honest with you. Yeah. Um, and
That’s just from the quick, quick Google search that I just did.
Yeah. It, it’s honestly, in my opinion, it’s doesn’t it do, it certainly doesn’t serve the landlord to have this legislation in place. Um, because if you have somebody that just barely meets the qualification criteria, and then you have someone that was well qualified, maybe they had stronger credit or better income, or whatever the case may be, you know, you should be able to select the best quality tenant available out of the tenant tenant pool for your apartment, in my opinion. Uh, and it’s, it’s frustrating when it’s frustrating when you see government stepping in and writing legislation without fully understanding what it is that they’re legislating. Um, the things that they’re doing is, especially in a situation like this, could actually cause detriment to both the property owner and the property, and honestly the tenant. Like if you get a tenant that just barely squeaks through the criteria, or you have to make an exception to get them through the criteria or something like that, that’s not necessarily what’s best for the landlord, what’s best for the property, what’s best for the tenant.
And especially when you have so many tenants out there screaming about, uh, half my income goes to rent and stuff like that. It’s kind of on us as the landlord to screen to make sure that tenants aren’t in a position where they’re rent poor, essentially, where they’re paying 50% of their rent, our caps, you know, one third of their, uh, their net income. So yeah, it’s, it’s a challenging situation when, when government starts to step in and legislate things without thinking all the way through. And I’ve had that discussion quite a few times, especially with regards to like the H S T P A laws in New York, but this is another good example of it. So,
Yeah. So Vandell obviously, our, our answer to you is check with your, check with your local legislation on that. Um,
Yeah. And that should check, that should check your local legislation, uh, your local and state legislation. Mm-hmm. Have a set of written criteria. And then if you’re not required to pick the first tenant, select the best tenant. That would be the, the response that I would give on that.
Cool. All right. Let’s go question from Penny. How about the wife and husband are on a lease with a guarantor signed currently on month to month, wife has a court order removing husband from property for domestic violence. Wife wants to sign a new month-to-month lease without husband’s name on it. The guarantor is not willing to sign anymore. Do I one, continue their current month-to-month lease that commits the guarantor still being, because lease is still valid and the court order has stated husband cannot be in the property, or two, wait until wife misses a rent payment, get payment from guarantor, and if not successful, three, send a pay or quit document to evict and evict.
Boy, there’s a lot going on here. Yeah. <laugh> is not willing to sign anymore. Wife and husband are on the lease together currently month to month, wife has the court order. A moving husband wants a new month to month without husband’s name on it.
So I think I would probably re-screen the wife and see if the wife still meets the three X criteria. Right. Um, if she doesn’t meet the three X criteria, I mean, you have a guarantor in place right now, um, and that guarantor doesn’t disappear just because of the DV situation. The guarantor is still tied to that month-to-month lease scenario.
So I’ve never done, uh, you know, as a, as a landlord, I’ve never done a month-to-month lease with any of, with my tenants. So is a month-to-month lease new, do you, can you technically sign a new lease at the end of each month? Does that like end the period if you’re on a month-to-month lease? Or is it like you sign one lease it’s month to month and then like at each month it, you can change it? Or how does that
Kind of work? That’s, that’s gonna be, that’s gonna be kind of one of those situations where it depends on the state too. Like, so in New York for instance, we have the 30, 60 90 day rule under H S tpa A and that’s regardless of whether it’s a one year lease or a month to month. So if that tenant’s lived there for two years, even if they’re on a month to month lease term, I still have to give them that 30. Well, actually if they’d been there for two years, it’d be 90 days. Yeah. So even on a month to month lease term, technically there are obviously still laws and things like that at play. Right. So going back to your question of at the end of the lease term, can you modify the terms of the lease? The answer to that question is generally going to be, yes.
You would have to provide, again, whatever the required notice is in your state. Uh, but that’s one reason that a lot of people choose to do month to month is because it allows them the flexibility to say, all right, well the lease terms are changing or the rent is changing, or hey, right, we actually need you to move out because we’re gonna Airbnb it or sell it, or whatever the case may be. So that is one of the benefits of being on a month-to-month lease. The, the problem with a month-to-month lease and having a guarantor tied to a month-to-month agreement is, and I don’t know how this would play out, this would be one of those things that you would need to talk to an attorney about. Can the guarantor just say, well, I don’t want to be the guarantor anymore, and as of the end of this month, it’s a month-to-month agreement, we’re terminating our guarantor agreement.
So there’s some stickiness there for sure. Um, going back to their question, do I continue to rent current month to month lease that commits the guarantor still because the lease is valid in court order, I would continue as you go. Um, changing the lease is not going to stop someone from showing up at the property. I’ve never met a piece of paper that will stop someone from showing up at a property if they ultimately want to. And that’s not your problem to resolve. That’s between the husband, the wife, and the police department. Uh, and you shouldn’t even be getting involved in it. If it’s a situation where the husband’s returning to the property and there is that order in place, nine one one is that tenant’s phone call, not the landlord. So in this situation, I think I would say continue with the current month-to-month agreement with the guarantor in place.
Um, see how long it continues before you have to, like you said, issue the pay or quit notices and move on with an eviction. The other alternative is if it’s really that sticky of a situation and you would rather just walk away from it, you might want to talk to the wife and say, listen, we’re gonna terminate this lease agreement or even offer a cash for keys. If it’s a situation where you have to give an extended period of time, be like, if you’re out by the end of this month, I’ll give you your deposit and full back and then you’re getting control of the asset back and you can do what you wanna do at that point. But from where I’m sitting and the information that I’m looking at here, I think I would probably continue the current month, month lease agreement, assuming that that, um, the current tenant is still able to afford the unit and if she’s not able to afford it or if she tells you she wants to move, I would say cut your losses. Move on and, and get a new tenant in there.
Yeah. Yeah. I think that’s, that’s good advice. Mm-hmm. <affirmative>. All right. Let’s move on. Let’s do, let’s do this question from Peggy. So two people A and B are on the lease that expires September 30th, 2023. Person A is moving out, then B is staying in adding C to the lease with her. So one person’s moving out, new person coming in mm-hmm. <affirmative> jumping on the lease with her. I would like to refund the security deposit to A and B and collect a new Secur security deposit from B and C. Mm-hmm. <affirmative>, when they start the new lease, how am I going to do a walkthrough inspection and see if there are any damages when all their stuff is still in the unit? Mm-hmm. <affirmative> and what if I don’t notice until B and C move out and there were damages to the unit back when A and B lived there? Mm-hmm. <affirmative>, what if I, what if A caused the damage and she is gone and also a recently added a companion animal cat. What if I don’t see any skirt or I don’t catch any damage that the cat did when A moves out?
Okay. So the easiest way to do this is to have tenant B by out tenant a’s position in the security deposit. What I mean by that is, let’s just assume we’re gonna use a thousand dollars round numbers and we’re gonna say A and B, both paid 500 towards the security have B pay a $500 for the security, and now B is in total control of that deposit B and a need to sign documents stating that A is moving out listing any damages that were caused by a during the tenancy. Um, and if there’s repairs that need to be done to those damages, they can loop the landlord in or they can figure out how to do the repairs themselves or or whatever. Essentially it’s up to A and B to determine what the condition of the unit is at the time that A is moving out of the unit.
Okay. Um, you are not gonna return a deposit to A, the deposit now lives with B. A was paid off by B and A is out the picture at this point. So A is essentially signing documents that they’re terminating their tenancy, they’re no longer responsible for the unit and they’re no longer responsible for any portion of the deposit on that same document B should be signing off that they are now in possession, uh, or that they are now responsible for the full deposit and that, um, they’re also responsible for any damages in the unit up until that point. So what you’re doing is essentially when A is out, you can walk in if you want and do your move through, move out inspection. Now you have a set of photos from move in, you have a set of photos, mid tenancy, we’ll call it, and then you have a set of photos at move out.
Mm-hmm. And hopefully from there you’ll be able to determine things like damages and things of that nature. But essentially what you’re doing is 10 a day is gonna go, you’re gonna sign 10 a day completely off, and they’re gonna be gone. They’re not gonna be a party to this lease anymore. Not this lease, not the security deposit, none of it. They’re gonna be gone B is going to become your main tenant. And then C, well, I guess B and C are gonna become your tenants and when they move out, it’ll be B and C that return that received the return of the security deposit. So more than likely what’s gonna happen is C is going to buy into the security deposit with B. So essentially B’s paying A and then C’s paying B, everybody gets made hold essentially. Right. So then B and C now own the security deposit. They’re the ones who are responsible for the unit at the time, you know, in the condition that it was in at the time of move-in the original move-in. Um, and then if there were any damages, those should be settled out by A and B. Right. As part of that transition essentially.
Yeah. That, that scenario actually happened. It, we had, back in my college days, we had, we were in an upper unit, we became friends with people in the lower unit. Some of the people from the lower unit were leaving. One of our people from the top unit were leaving. And we had, we became such good friends with the lower unit that two of us moved in with the one remaining person right. In the lower unit mm-hmm. <affirmative> and very, very similar uh, situation right there. Mm-hmm. <affirmative>. But exactly what we ended up doing. Yeah. We, it was put on the tenants to figure, you know, transfer that responsibility over within each other and then mm-hmm. <affirmative> moving forward. The other people got completely off the lease and, and then we were, we were left responsible.
And that’s the, it’s the cleanest way of handling it I think. Um, it’s, the problem is, and Peggy’s exactly right, she’s not gonna know if A caused a bunch of damage or if B caused a bunch of damage during the time that A and B were living together. Which is why I think it’s important for A and B to kind of assess whether there are any damages and list who was responsible for them. And again, if like, let’s say a broke a window or ripped a screen or something like that, rip screen is a good example. A should be charged for that and that repair should be completed. And then the landlord is all set basically the units back to where it was. Mm-hmm. <affirmative> prior to B moving or C moving in. So it essentially what it does is it keeps the responsibility on the tenant as much as possible and it takes the headache off of the landlord’s plate as much as possible.
And kinda like what you said, the most common time that we see this is with college student rentals, um, especially right around semester change, you get somebody that is going home, you get somebody else that wants their space or something like that. We see it a lot with college student rentals. We see it a lot with couples as well. Um, scenarios basically exactly like Peggy played out here. And I think that’s the best way to handle it is try to put it back on the tenants as much as possible. But definitely make sure that you do a walkthrough between tenants. If you can get through the unit after A has moved out, but before C has moved in, that’s the most optimal time to do it. Cuz all of a stuff is gone. None of C stuff is there yet. So you should be able to walk through at least the common areas and the room that C is moving into to get a feel for what’s going on and what the room looks like, the space looks like. Yeah. But realistically speaking, that may not be the case, just depending on timelines and when people are moving out and people are moving in.
Yeah. And I’m looking down the, the question sheet now and it looks like I’m gonna add,
I think she’s got another
This addendum question onto it cuz she’s got another question relating to it. She’s got two people, A and B have lived there for two years. A is moving out at the end of the lease and B is staying in adding C onto the new lease. Yep. Do I have both B and C fill out an application and go through screening or just have C fill out an application and do screening on C I would think just C, just C or no,
I would have C do a full application. Um, yeah, so you can do it one of two actually. You can do it any way you want. You can do it. No applications, which is the silliest way of doing it. Yeah. Um, I would probably have c complete a full application and run them down like any other tenant. And then b, I would probably just do an income verification on because they’re an existing tenant. Right. Or you could tell B and C both that they need to submit new rental applications and that gives you the opportunity to run a new credit and background on B and see if anything’s changed as well as verify their income and make sure that the two combined make whatever it is that you’re requiring for your, your income requirement. Um, but in this instance, I would probably skip the application on B and just do the application on C and then write the new lease. Yeah.
Yeah. And if you’ve got somebody that’s been there for two years, it’s a tenant that’s been there for two years, you seems like you would have, you have a decent relationship with that tenant and obviously mm-hmm. <affirmative> still gotta do everything, you know, to protect yourself. But, you know, it seems like she’s, Peggy’s got a relationship with that, with that tenant that she might, you know, she trusts ’em.
Yeah. And I would say that, um, I mean we really don’t know from the questions here who was the, who was the breadwinners breadwinner or winners. But yeah, I would say like for sure you at least wanna make sure that the piece still has income combined with C so that you know that the apartment is still going to be paid for on a monthly basis. I personally don’t feel that it’s necessary to run a new credit and background check every single time. Um, even when we do lease renewals, I don’t run credit and background checks. Um, some, some property managers and landlords do. Um, I just don’t feel that it’s necessary. We haven’t really found a reason to do that per se, so we just don’t. Um, but yeah, that’s how I would handle it.
Okay. All right. Let’s move on. Let’s, let’s pull some, some actual Facebook questions now that came in. Okay. Uh, let’s do this one question from John. Uh, question for the group. I have a great tenant who moved into our property about a year ago because she moved from a house that she had mold, which made her sick. She messaged me today that when the AC turns on, she starts to feel like crap. She does have high sensitivity to mold. She wants to have a company that specializes in mold and she wants to hire a company that specializes in mold and have the ducts cleaned. She’s asking if we will cover some or half or are going to get it serviced since it’s due. They are going to get it serviced since it’s due anyway. Has anyone run into this before? Or what should the landlord cover, if anything?
Um, so duct cleaning is not something that we typically do in our rentals between tenants or anything like that. If it’s a situation where the ducts haven’t been cleaned in a long, long time, maybe it’s something where you do want to kick in half to, uh, kind of a plea kind of pe excuse me, kind of appease the tenant. Yeah. Would I kick anything in on this? I probably would not. Uh, so this tenant’s coming to you, they have a complaint about mold, I’m sorry, they have a complaint that they start to feel like crap when the AC turns on. Um, but they haven’t done any testing or anything to see if there’s mold in the system or anything like that, which realistically speaking, um, there may or may not be, who knows? Yeah. It’s one of those situations where anytime somebody mentions something like mold to me, I automatically start wondering, okay, is this really about mold or is this a situation where they’re trying to find an exit path for their, for their lease?
Or is it if like, if there’s legitimately a mold situation, you need to deal with the mold situation. Um, mm-hmm. <affirmative>, don’t get me wrong, like if there is legitimately a mold problem, yeah, you need to deal with that and that should fall back on the property owner unless it’s a situation that was caused by the tenant, like not running a vent fan in a bathroom or something along those lines. But in this scenario, like we just don’t have a ton of information here. And I don’t know, it just feels like one of those things that when somebody’s asking a question and they, they, they immediately start with every time the AC turns on, I feel like crap. Mm-hmm. <affirmative>, it might be worth having somebody go out and take a look at it. Uh, but you need to start preparing yourself and documenting and things of that nature so that if this tenant does turn around down the road and say, well, I have severe, um, respiratory issues now because of the mold in this home, then you need to be able to turn around and say, okay, well we have no proof of there being any mold in the home.
We’ve done X, Y, and Z. There was never any indication of mold or microbial growth in the property or whatever the case may be. So mm-hmm. <affirmative>, I would say just walk very, very carefully. Maybe talk to an attorney, see what your attorney recommends on the, something like this. If there is a mold situation, absolutely deal with the mold situation right away. Keep in mind that not all, um, flavors of mold are harmful. There’s a lot of ’em out there that are not. Um, but that doesn’t really matter. When a tenant starts to see any kind of microbial growth, their first thought is, oh my God, it’s black mold and it’s gonna kill me. So I would say talk to an attorney maybe on this one, see what they recommend. I would say maybe get somebody out there with regards to the duct cleaning. That might be enough. That might just be, it might just be a dust situation. There might just be a bunch of stuff in the ducts that need to be cleaned out and that might resolve it. Um, I would say check the furnace filter as well see if their furnace filter is clean or clogged. If it’s a situation where they are having respiratory issues, more frequent changing of furnace filters is probably a good idea. Um,
I think that’s it. I think that’s everything that I want to cover on that.
The condensate lines maybe on the, um, so there’s a condensate line that runs off the, off the furnace side that runs usually to like a floor, a floor drain or to alop sink or something like that. Make sure that those lines are clean and not obstructed. Um, tho those get gunky and gross over the course of time. Swapping them out is not hard. It’s just a piece of rubber tubing you could pick up at Home Depot for 10 bucks for a length of it. Um, those do sometimes get moldy mildewy green gross. Um, that’s an easy repair and that’s definitely something that if a tenant’s physically looking at the furnace and sees that they’re gonna say, oh, there’s mold everywhere. So that’s a pretty straightforward and easy thing to swap out, uh, with the condensate lines.
Yeah. Okay. Good. Uh, all right, next one here. Let’s do question from Marcia. Does it make more sense to let a person walk through a unit and then put in their application or put their app in first, which would be a credit check, background check, et cetera? So,
So interesting that this question came up because there’s actually, we’re starting to see a shift in the industry, um, especially amongst professional property management companies where apartment showings are starting to be a, you need to either, uh, fill out an application and be at least pre-qualified or you’re not gonna see the unit. So there are some people who are doing, you need to see the, you need to go through a full application process and be approved before you can see the unit. And then there are other people that are just come take a look at it, you know, and decide whether you like it and then you can fill out the rental application. The way that we’re doing it right now is, um, the last one, essentially we’re doing open house style showings for the most part, and then if you come out and you’re interested and you want to proceed, we would have you do the rental application at that point.
Um, and then we screen the rental application and go from there. There’s some property management companies that are also starting to move to a self showing platform where an applicant can actually go and walk through the unit without a leasing agent present. More often than not, that’s where you’re seeing people require some level of application, whether it be you need to put in your application and then we’ll give you the lockbox code or, um, you need to put in your application and we’re gonna verify everything first and then you can go take a look at it or whatever the case may be. Mm-hmm. <affirmative> and I had an issue with it at first. I’m like, why on earth are you requiring people to fill out an application before they come out to see a rental property? And then I realized that that’s the way that it’s been in the home sales industry for literally forever.
You don’t go show houses to someone that’s not qualified. Mm-hmm. <affirmative>, and I kind of look at it the same way this way, like if you’re doing self showings or even if you’re not doing self showings, but you just wanna verify before you go out and show something that the person’s qualified to actually rent it. Yeah. Um, I don’t think it’s necessarily a bad idea. I think that it goes a long way in eliminating tire kickers. I think it goes a long way in eliminating time wasters. Um, I mean, Josh, the number of people that I’ve had that have confirmed for an appointment at one o’clock and then not shown at two o’clock is staggering. Staggering. Yeah. And that’s like, that’s real time for me because I’m driving to the property, I am opening it up, getting the lights and everything turned on, standing around for 20 minutes waiting for somebody to not show up, turning everything off, locking the property up and going back to my office.
So we’re burning, on average, we burn between an hour and an hour and a half on every single showing whether someone shows up or not. Mm-hmm. <affirmative> mm-hmm. <affirmative>. So don’t be surprised if more and more landlords move to a model where you have to either pre-qualify before you can see a place or, um, pre-qualify before they give you a lockbox code for a self showing. Because frankly, the public at large doesn’t seem to care that they’re burning up other people’s time. And I think that this is one of those things that’s gonna, landlords are gonna be forced to do just so that they’re not spending their entire day standing around a property. Right. We open house for the most part, which seems to work really well for us. We’ll have an hour long open house and just say, if you want to come, we’re open from one to two, come take a look, get your application and, and go from there. Mm-hmm. <affirmative>, that’s, that’s, that seems to work really well for us.
Yeah. And something that I’ve seen just with like the demand for rental demand for rental properties around here, even in like the Buffalo area, people are just trying to go on and put as many different open house. Yes. Set as many appointments as possible. And then it is like, okay, I might not have even really wanted to see that property, but I’m still gonna book the time to do it. Right. And then like you said, like people are just not showing up because maybe they go and see another one and it’s more, more enticing to them and they’re like, ah, mm-hmm <affirmative>, I’m not gonna cancel the appointment. I’m just gonna, they forget all about it. So yeah, I’ve seen that. I’ve seen that a decent amount
Happens a lot to be honest with you. And like, yeah, filling an apartment as a sales process, just the same as selling a house or selling an addition on a home or whatever. And you have to expect that you’re never going to land every single person that you talk to. But it’s like the last time I did the math, it was literally about a hundred leads to get one successful tenant placement, which is crazy. Um, it’s crazy. It really is. And I honestly think that things like self showing technology and stuff like that will definitely help to improve the landscape for both landlords and pro or property managers as time goes on. So for sure it’s just a matter of how quickly does that technology get adopted And I think a lot of property managers will adopt it first. As I mentioned, there’s several here in western New York that have adopted it. Um, and I think that after that it’s gonna start filtering down to the individual landlords who realize that their time is valuable.
For sure. Okay. Let’s, uh, let’s roll on. I got a question from Kim. So tenants on a one year lease February, 2023, they’re splitting up. Guy wants off the lease, girl wants to stay, but doesn’t make three x income on her own. Now he’s taking her car in his name. Any suggestions? So I think this question is basically,
What do I do on
Her own? On her own? She’s not, she’s not meeting the requirement of, of three times, uh, income. Uh, what, what should you do if this situation happens?
I would, I would basically give the tenant, let’s see, tenant on one year lease, tenants on one year lease February, 2023. It doesn’t say if that’s the end of the lease or the beginning of the lease. I’m gonna assume that was the beginning of the lease. Yeah,
I think so.
So you’re under no obligation to let the guy off the lease first and foremost, unless it’s a month to month. Um, if it’s a situation where they’re in a one-year lease, then you’re under no obligation to let him off the lease simply because he wants to move out because they split up. Right. Uh, and he is still responsible for the rent. Hopefully your lease says jointly and severally liable mm-hmm. <affirmative>, um, which makes them both jointly together, responsible for the entirety of the lease sum as well as separately if one person doesn’t pay, the other person needs to pick up the slack sort of a situation. So I’m assuming that you’re under no obligation to actually allow him off the lease documents. Um, she does not make the necessary income, so she would not qualify on her own. The only way I would write a new lease document on this would be if she had a roommate and they combined made the three x, or if she had a guarantor and we look for four and a half X on guarantor mm-hmm. <affirmative>. Um,
But legally she can’t be, she can’t be, since it started in February, she can’t be evicted as long as she keeps coming up with the, the rent money until that lease is, until that lease is finished up.
I mean, I’m not an attorney, but I would think that yeah, unless she stops paying rent or breaks some other lease term that she’s, they’re, they’re technically, if, if the rent’s still coming in and they’re not breaking any of the other lease terms, they’re a tenant in good standing despite the fact that the guy may or may not be living there. So
Yeah, for sure.
Yeah, no, no obligation to remove him from the lease until, uh, until the end of that lease term. And at that point, if she still doesn’t qualify, she still doesn’t have the income and she doesn’t have a guarantor or a roommate, I would tell her unfortunately, it’s time for you to move cuz you’re not gonna be able to support this unit on your own.
Yeah. Gotcha. Okay. Let’s do, oh, this one might be interesting. Why don’t we do this question from Ruth. Ruth says, do any of you offer a referral fee to someone for bringing you an applicant that you approve referral paid upon lease signing in receipt of non-refundable hold deposit, which is applied to security deposit upon lease execution. Do you, got you ever seen that Andrew,
For Hang on, I need to fix something first. There’s no such thing as a non-refundable hold deposit. I actually had this conversation, for lack of a better term, in the, in the rent prep group last week. At some point, non-refundable deposit is not a deposit, it’s a fee. Non-refundable is a fee refundable is a deposit
This, and it’s, we laugh, but like this is one of those things that hangs people up all the time because they’ll say, oh, I have a non-refundable, I have a non-refundable, uh, deposit on the apartment. Well, your applicant doesn’t hear the word non-refundable. They hear the word deposit and think, oh, I can just get, I’m gonna get that back if I don’t take the place. Mm-hmm. <affirmative> security to deposit, you don’t get to keep the deposit at the end of the lease unless there’s damages beyond reasonable wear and tear to justify or rent charges or whatever. You have to have a reason. Same thing in this situation. There’s no such thing as a non-refundable hold deposit. It’s either a hold charge, hold fee, um, or it’s a security deposit. One of the two.
You can convert your fee to a deposit. You can say that I’m taking a thousand dollars non-refundable hold fee that will convert to a security deposit at the time of move in. But if they don’t move in, it’s still a fee and it’s still yours mm-hmm. <affirmative> and you still keep it that. Gotcha. I really want to hammer that one home because that pops up so much. And I know that more often than not, we understand what we actually mean when we’re saying it, but it’s one of those things that depending on how it’s written, can really hang you up and cost you some serious money.
Security deposit, non-refundable fee, two very separate things. Mm-hmm. <affirmative>, um, what was
The, so as far as <laugh>, so
So do you offer any, do you offer a referral fee to somebody who brings you a, a perspective or a, a tenant that eventually signs the lease?
So we don’t, uh, put our listings in the MLS or anything like that. If we have an agent that says, Hey, I have somebody that’s interested in one of your rental properties. Um, you know, we’ll let the agent go show the property and we do co-op out typically a half month’s rent if that agent brings us a, a viable tenant that we end up approving and, and placing. And then if a tenant brings us a, uh, a tenant brings us a referral or something like that, we typically give two 50, uh, two, excuse me. We typically give a $250, um, credit on the following month’s rent. So if the tenant moved in in July, then the, the tenant referring tenant would get a $250 credit in August essentially. Um, and that seems to work pretty well for us. We’ve gotten some great tenants that way. Mm-hmm. <affirmative>, especially in, in duplexes and things like that where you have a tenant that they live downstairs and they really wanna know who their upstairs neighbor’s gonna be. We always tell ’em, well, if you have a friend or a family member that you like living near, have them apply, uh, pick your own neighbor sort of a situation. So, and that works pretty well for us.
Yeah, no, that one, that makes sense. That’s, that’s nice. That’s a nice little chunk of change for a Yeah. For somebody. Yeah. And you, and you’re getting somebody that you hope is just compatible and would, would cause less issues if they’re living in a property or a unit next to the existing person. I know sometimes that might not be the case. Sometimes that could cause more issues if you’ve got,
It really depends. A
Group of, a group of, uh, below group above and you know, they get along too much. Yeah. But, you know, I I still think it, it, it just, you know, it depends, but it, it could be a
Good thing. It goes, it goes both ways though because, uh, people, landlords especially seem to think that tenants just kind of exist individually and don’t think about the fact that your upstairs tenant, you’re downstairs tenant run into each other on a daily basis. Like they’re probably talking. So if you do something to the upstairs tenant and the upstairs tenant doesn’t like it, they’re gonna to the downstairs tenant about it. Mm-hmm. <affirmative>, um, 100% they’re gonna complain. So it’s just understand that when you, when you enforce a policy on one of your units, the other units in that same building are in that same complex or whatever, they understand that you’re cracking down mm-hmm. <affirmative> because more often than not tenants are talking and understand the fact that what’s happened to that guy might turn around and happen to me next month. So it’s definitely something that tenants are aware of, I would say.
Yeah. Okay. Um, let’s do, why don’t we do this one from Janet. Question from Janet. We, we secured a tenant for our rental though. They signed a lease and gave us secured deposit, but they can’t move in until July 1st if they for some reason back out and can’t move in. Can we keep any or all of the security deposit? We are not anticipating that happening, but just wanted to know what if,
So this one’s gonna be state dependent. Um, we’re gonna call it a security deposit because that’s what they called it here. So with a security deposit, there is an as assumption that it’s refundable. Okay. So with that in in mind here in New York, you have an obligation to, um, forget how they word it exactly in the law, but you have an obligation to, um, mitigate damages, I think is how they word it. And what I mean by that is, so you have a tenant, you’ve now taken the unit off market because they’re set up for a j a July one move in and that tenant does not move in. You have a duty to mitigate damages. And what I mean by that is you have to put the unit back on the market, you have to start showing the unit, you have to try to find a new tenant.
And technically, um, the tenant that did not move in, depending on your state, um, may or may not be responsible for the unpaid rent and utilities and things of that nature because they signed a lease agreement. Mm-hmm. <affirmative>, they gave you the deposit, um, they’ve obligated themselves to that unit. Some states whether they took possession or not will matter. So that’s something you want to talk to an attorney about. But realistically speaking, the tenant should be responsible for the rent and the utility costs until a new tenant is found. And I would deduct that from the security deposit. And then if there’s anything left, say you find a tenant that moves in on July 15th, so they have a half month of their deposit left minus some utility charges, whatever the remaining balance is that’s on that deposit should be refunded to the outgoing tenant at that point.
Yeah. Um, so yes, you do have an obligation there to refund anything that’s not used. Check your state law because it may be different in your state, but I can tell you in New York at least you do have a duty to mitigate damages. Um, and part of that duty to mitigate damages would be finding a new tenant for the unit. Um, but by the same token, that tenant is responsible for that unit until such time that a new tenant is placed. If it takes you six months to find a new tenant and you can prove that you’ve been showing the unit and stuff like that, technically that tenant, the one that never took possession of the rental, may be responsible for all of that rent and all of those utility charges. Good luck collecting it, but technically, you know.
Yeah. Oh, gotcha. All right. Um, looks like we’ve got a, got some time for a couple more here. Mm-hmm. <affirmative>. So let’s move on. Let’s move on to how about this one from Naomi? So Naomi says, has anyone encountered bedbugs? My tenant just called, stating that Terminex came in and spotted bedbugs, they would like us to pay half, $1,500. They moved in, I’m guessing half for the extermination. They moved in November of last year. Term next Saturday was two to three months ago that it started. Any thoughts of finding a local company that does less or d i y solution with a fogger? So it looks like they’re acknowledging that there were bedbugs, but they’re looking for a solution that might be cheaper than the $1,500 split. But maybe, maybe the question really here is are they responsible to contribute to the extermination of, of bedbugs as a landlord?
So again, this one’s gonna be state specific because some states do actually state that by law you are required as a landlord to deal with the infestation issue and then back bill the tenant for the cost of it. Mm-hmm. <affirmative>. Um, so check your state law first cuz that’s gonna be relevant here. Bedbugs suck. Um, getting rid of bedbugs is a nightmare. We’ve had ’em several times in different apartments over the course of the years, and it’s a process every single time. The most, there’s not a cost effective way of doing it. Is, is the worst part of it. Um, and a really, a lot of it’s going to be dependent on how compliant your tenant is before and after the treatments. Mm-hmm. <affirmative>, um, is gonna have a big determination as to how many treatments you need. Is, is where I’m driving with that.
Mm-hmm. <affirmative>, what we have found works the best is high heat treatment. And what I mean by that is they basically heat the entire apartment up to, I think it has to be above 120 degrees. Wow. Uh, maybe it’s 140 degrees, I can’t remember. Yeah. They basically have to run like full-size furnaces in these apartments to, to heat ’em up to the point where, and it has to sit at that temperature for a certain amount of time or whatever in order to kill the bedbugs and kill the eggs and stuff like that. And I’m not sure if the heat actually kills eggs. I’d have to look into that. That’s the best possible scenario. But you have to combine that with good preparation in the form of stripping all of the linens and all of the curtains and all of the clothing needs to go through and be washed and dried on high heat and then sealed in plastic bags like, or bins so that bedbugs can’t get back to them.
You know, mattresses need to be tipped up on their side so that they can be steam treated and things of that nature. There’s a lot that goes into scheduling a bedbug extermination, and then at the end of it, the chances of you being successful on your first treatment are not great. Usually it does require multiple treatments to deal with. My recommendation is to find a company that guarantees their treatment so that hopefully you can get them to come back out and retreat either free or at a reduced cost or whatever the case may be. Right. We have done the spray method, uh, several times. We’ve had exterminators come out and do the spray method, which does not work great. Um, it’s, you know, we’ve tried the, the Dimitrius Earth, I think it’s called the de mm-hmm. <affirmative> that works. Okay. Um, but honestly, the, the most cost effective, uh, and actually it’s not cost effective. The most
Effective for lack of a better, like is, is the heat treatment. Yeah. There’s not really a better method, in my opinion, than the heat treatment. It’s
Expensive. Yeah. I’m looking at, oh yeah, I’m looking at the, the Terminex company, just the, the general, uh, FAQ section of their site right now. And it looks like, and, and again, this is just right off of their site, but it looks like bedbugs exposed to 113 degrees Fahrenheit will die after exposure of 90 minutes. And if you get the apartment up to 118 degrees mm-hmm. They should die after 20 minutes. But it also does say there, there may be multiple treatments that are, that are needed for it.
Yeah. You’re pretty much guaranteed to be doing multiple treatments. I mean Yeah. You’re never gonna get deep into the, like we had one apartment that the infestation was pretty bad, but like the bedbugs were crawling down in between hardwood floor planks, wherever they could find a little, they’re tiny, like bedbugs are small.
It’s very tough to get rid of a bedbug, uh, infestation. The one thing I would say here is if the tenants moved in in November, and Terminex said that it’s been two to three months that the bedbugs have been in the property, it doesn’t sound to me like the bedbugs came from a previous tenant or were brought into the property by anyone other than the current tenant or the tenant’s guests. Yeah. So that might be something to consider. A, again, depending on your state, you gotta check and see what the requirements are for, um, what the requirements are for extermination in your state. But if this is something that the tenant is responsible for and you’re not in a state that requires you to be the one to mitigate the damages, I would require the tenant to mitigate it, pay for it in full, and provide receipts showing that the extermination companies verified that there’s no longer an infestation.
Uh, and I wouldn’t, I wouldn’t pony up any of it. And if the tenants move as a result of the bedbugs, I would immediately deduct the bedbug treatment from their security deposit. Mm-hmm. <affirmative>. So it’s, uh, yeah, it’s one of those situations where bedbugs suck. I hate it. I hate it every time we get a phone call from somebody saying that they have bedbugs, because more often than not, it’s something that was brought in, you know, by the tenant or a tenant’s guest or a tenant’s pet, or it could be any of a number of things that track it in. And once they’re in, they’re very hard to get rid of.
Yeah. Gotcha. All right. I think we have time for one more and let’s go with this question from just, sorry if I’ve asked this before. Do you have anything pertaining to outdoor flags, science, political, or not in your leases?
We do. Let me see if I can grab a copy of my lease document real quick just to,
Uh, applications and leasing, we actually just got our lease back. So while I’m digging this up, I guess it’s worth mentioning if you are still using the same lease that you’ve been using for the past 10 years, if your lease is any older than one year old, you need to talk to somebody about having it reviewed. Mm-hmm. <affirmative>. And the reason I say that is because we pay to have our lease reviewed every year by our attorney and it costs us some serious money. Like it’s, it’s not a small bill, but we write that check every single year because especially for, uh, d i y landlords, people that only have a couple of buildings where they’re managing themselves and things of that nature, you have a full-time gig more than likely, and you’re not able to pay attention to every single legislative change that takes place over the course of the year. And there’s a lot of ’em. So having somebody that is involved in the landlord tenant business on a day-to-day basis, review your lease is a good idea because it helps you to catch some things that you may not catch otherwise. Mm-hmm. <affirmative>, um, and that’s my, my theory on that, <laugh>. But yeah, we have ours looked at at least once a year. Uh, let’s see.
Yeah, I mean that’s, that’s just good for peace of mind too. You, you go into the Exactly. You don’t have your lease reviewed for a few years and like you said, with all the, all the different changes, like, you know, you don’t wanna get caught in that situation where you’ve got something in there that’s outdated and, and not, not credible anymore. Right. Let’s see. I’ve got, I’ve got a side question for you, Andrew, while you pull that up. Do you have, I saw this in the Facebook group, I know July 4th is coming mm-hmm. <affirmative>, July 4th is around the corner. And I had seen, I think I saw somebody in the ramp prep Facebook group, or maybe it was a different one, but they had put a question in there. Um, does anybody include like no firework policies within, within their leases?
I don’t think I have no fireworks. Hang on. Let me see if I can present. Let me grab share screen share just this tab. Nope, not that tab.
That one. There we go. So this is actually directly from my lease. Um, no alterations, decorations, addition or improvements in or to the premises without landlord’s prior consent. Mm. And that typically would cover our indoor outdoor, I thought, I thought I had something in here that specifically talked about like holiday decorations and political signs and stuff like that, but I wasn’t seeing it very quickly. Um, but this is actually one that these two sections here are actually pretty critical. I would say that these are pretty important. Swimming pools, kitty pools, wading pools, hot tubs, water slides, sprinklers, standing bodies of water, trampolines, playground equipment, grills may be used on an outdoor grassy area only never indoors on a porch or on a balcony. We lost a house that way, by the way. We lost a house because tenants were using a grill on a balcony and lit the house on fire.
Mm-hmm. <affirmative> burned the entire house down. Uh, at no time may any tenant belongings be stored in attics basements, common hallways, common stairways. Um, at no time should any tenant belongings be stored in a fashion to prohibit access or egress. Um, and the, those are, those are both very common things that we run across. We, as a matter of fact, have a couple of violations out right now for tenants that have kitty pools in the backyard. Mm-hmm. <affirmative> and I have one out for a tenant that has a bunch of stuff stored in the back hallway such that like if the fire department was to get there and need to go up that stairs, they wouldn’t be able to even climb up that set of stairs. So yeah, that’s, um, definitely relevant stuff. Um, and actually, let me do a stop screen on this. I’m gonna try searching for trying to search for politics to see if,
If there’s any, uh, inclusions in, in agreements.
I must not have it in there. I might have, it might have been swabbed out or in like, cuz we’re already covering it in that section that I did go through. So it might be something where we, uh, scrub the section that specifically talked about like outdoor lighting displays and stuff like that. Honestly, I really don’t mind if somebody wants to hang a flag or a banner or something like that. Um, as long as they’re not like openly
Like promoting hate speech or something like that. Like I don’t, I don’t really love seeing political signs on the front yard of, of our rental properties more or less just cuz I think they’re tacky <laugh>. But I’m not gonna tell somebody that they can’t support their, I’m not gonna tell somebody that they can’t support their candidate. Um, yeah. Really it’s more of a, we just don’t want people like putting Christmas lights up in December and not taking them down until July. Yeah. That’s really what more what we’re trying to enforce for sure. But yeah, no, I have no problem if somebody wants to put up a flag or I don’t care what the flag is, I don’t care if it’s American flag or pla a pride flag, whatever, it doesn’t really matter as long as, again, as long as it’s not inciting hate, it’s not a sign with a bunch of hate speech on it or whatever we’re Yeah. Don’t really care. It doesn’t matter. They’re not causing major damage by putting a, a flag on the building. It, it, the one thing I would say though is, you know, it might make sense if they want to hang a flag to have you come out and do the install of the flag holder mm-hmm. <affirmative>, um, just so that they’re not running a bunch of screws through siding or tiling or something like that.
Right. No, that makes sense. But okay. Looks like we got 2:02 PM so we are gonna wrap it up.
All righty then.
Let me see. Yeah, I think that’s a good spot. Okay, cool.
So other than the tech issues, I would say this was a pretty good, pretty good episode.
<laugh>. Yeah. Again, you know, we’ve, we got those tech issues, but I thought that again, topics were, topics were good. Uh, I definitely enjoyed this one. It’s, it’s fun as we get into the, the summer months here in Buffalo, at least we start thinking about a little bit more of the issues that can arise outside with mm-hmm. <affirmative> with just some of the summer stuff, some of the fireworks stuff, signs, all that kinda stuff. So I like that. The fireworks
Questions. No, I forgot to, I forgot to mention that you, you brought up the fireworks thing. Yeah. Let me grab my lease again real quick. I just wanna see if I have fireworks mentioned anywhere.
A last minute buzzer, beater, answer from Andrew here.
<laugh>, uh, fire department, call the fire department if there’s a fire. Uh, I don’t have anything in there about fireworks now you’ve given me, I now have a new, a new concern that I need to add to my lease.
Yeah, no, that, that makes sense. I just did a quick, I saw the question, I did a quick Google search and I was like, ah, do people put this in their lease? And there were some mentions of of having it in there just, just as a safety precaution.
I mean, we have like no smoking, no candles in our lease. I would hope that if people see no smoking, no candles, they would think, okay, maybe I shouldn’t light this bottle rocket off in my kitchen <laugh>. But
Sure. Who knows? So
Who knows? All
Right, so we’re gonna be back in July with another episode of ama, which is awesome as always. We have a couple of podcasts that come out, usually use the AMA as one of our podcasts. And then we have a fresh podcast once a month. We also publish a couple videos every month on our Facebook page. And we also have the rent prep for landlords, YouTube, or excuse me, Facebook group, which is where most people who see this content are probably picking it up from. But I know this will go live and it’ll get listed as a podcast and we’ll also upload it to our YouTube page as well. So yeah, um, keep watch for that. Keep watch for our AMAs all the time because you can always ask a question for these things. And if we don’t get through all the questions, a lot of times we do keep ’em on file so that if we run short the next month, we might actually recycle some from the previous and get your question answered that way. So, uh, thank everybody. Thank you everybody for tuning in and watching. Apologize for the tech issues this month, but hopefully we’ll be live next month and everybody will be able to, uh, to shoot some comments out live. Otherwise, I’m Andrew Schultz and that is Josh. Mm-hmm. <affirmative>, Ungaro. There we go. There you go. I think I pronounced that
Right. Didn’t, yeah, it didn’t even, I looked
And I looked for it immediately too and I’m like, oh God, what is Josh’s last name? And of course you, no, you got it. You do that <laugh>.
You got it.
So thank you Josh for joining me today and thank you everybody for watching. We’ll see you guys next month.