In this week’s episode, Podcast Host, Andrew Schultz, chats about tenant-proofing a rental including what appliances to invest in, services and more.
Yikes! What should a landlord do when a tenant refuses to fill out a W9 and why would a tenant need to fill out a W9 anyways?
Last, but not least, we’ll chat about a problem tenant that is claiming that people are forcefully breaking into a rental. Listen in now!
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Andrew Schultz: (00:01)
Hey everyone. Welcome back to another episode of the Rent Prep for Landlord’s podcast. This is episode number 369. It’s our first of 2022. And I’m your host, Andrew Schultz. On today’s episode, we’re gonna be talking about how to tenant proof a rental, what to do when a tenant claims forced entry of their unit, and renters refusing to fill out a w nine form. We’ll get all that right after this
Voice Over: (00:24)
Welcome to the Rent Prep for Landlords podcast. Now your host, Andrew Schultz.
Andrew Schultz: (00:30)
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 who are around the country. And if you have a question or a that you’ve never dealt with before with over 12,500 members, chances are someone in the group has been there before and can lend a helping hand. We’re currently pushing for 13,000 members. So if you haven’t checked it out yet, do that today over at facebook.com/groups/rentprep. Don’t forget to mention the podcast when answering the questions, so we know how you found us.
Voice Over: (01:06)
Forum quorum, where we scour the internet for ridiculous posts from landlords and tenants.
Andrew Schultz: (01:14)
This week in forum quorum, we’re helping a new landlord to tenant proof, their unit. Let’s go ahead and jump right in here. I’m new to this and kind of stumbled into it with a single-family home. I’ve talked to some local landlords and heard things like make sure you buy a quality garbage disposal and have an automatic fan in the bathroom to get rid of the humidity. I could use some advice from experienced landlords, please. This one comes to us via the landlord subreddit. So garbage disposals are one of those things that you either love or hate a landlord. And personally, I hate them. I’ve lived in places both with and without garbage disposals and in the places where I had one. It honestly didn’t even get a ton of usage. The main pros to a garbage disposal is that it reduces food waste going into the trash, which can attract bugs and rodents, especially around trash cans and dumpsters.
Andrew Schultz: (02:01)
You know, where the food waste winds up sitting and stinking and it, it attracts bugs and it attracts Burman. That’s not news to anybody depending on your area. You may find that this pro alone outweighs all of the cons. If you really have an issue with Bugg issues or with rat infestation or something like that, just having garbage disposals to take care of some of the food waste might be worth the potential negative consequences of having the garbage disposals. The main problem, at least in my opinion, with garbage disposals in a rental property is that many people and really not even just in rentals tenants and homeowners, both many people have no idea how to properly use a garbage disposal. You really have to spend some time talking to your tenant and explain what they can and cannot put down the garbage disposal.
Andrew Schultz: (02:48)
It’s not a wood chipper, its capacity is limited. It’s not gonna take everything. And it’s a lot easier to jam up than what you would think. And all it takes is somebody to run a banana, peel down a garbage disposal, and guess what? It’s time for new garbage disposal. So while you’re at it, while you’re showing the tenant, what you can and cannot run through a garbage disposal, it’s a good idea to show them how to move the gears forward and backward manually using the wrench that comes with the garbage disposal as well. And as well as that, there’s also the little reset button on the unit that basic we trips out, anytime something gets stuck. So showing a tenant how to do those two things will probably reduce the number of service calls that you have on your garbage disposal, but at the same time, garbage disposals in a tenant in a rental unit, they can really turn into a headache very, very quickly.
Andrew Schultz: (03:34)
And while you’re meeting with a tenant to discuss the garbage disposal, this might also be a good time. Talk about things like putting, cooking, grease down the drains and how cooking grease should never go down sinks, toilets, or tubs, cuz it’s gonna cause the blockage and plumbing lines, and you as the tenant are gonna be responsible for that. If it’s determined that it was cooking grease that caused the blockage, et cetera, et cetera, kind of adding this into your, when you meet the tenant to exchange keys at move type of a thing, we talk about checklist quite a bit. Maybe this is something that you put on your checklist, go through, talk about not running grease down the drains. Talk about how to use the garbage disposal, properly, things of that nature that might actually help you with having fewer issues in the long term with garbage disposals.
Andrew Schultz: (04:16)
But realistically speaking, my strong recommendation to eliminate a garbage disposal whenever possible, if it breaks, remove it. If it’s during a turnover, remove it, pull ’em out, REPI the drain. So you’ve got one nice solid pipe all the way through. If you’re gonna keep them, make sure that your tenants know how to use them. Also, consider adding some language into your lease that might cause the tenant to be responsible. The garbage disposal breaks due to their misuse. Just something to keep in mind. You can have an attorney help you with that sort of a language automatic fans and bathrooms are a great idea. What I’m referring to are the fans that are tied to a light switch so that anytime the bathroom is in use, the fan is also on. They also make fans that can actually detect humidity in the air and will automatically start and stop as needed.
Andrew Schultz: (05:02)
That’s another type of automatic fan. I think what they were referring to here was more of the on and off with the light switch type automatic fan. So the light and fan on the same switch has some pros and cons. The biggest con being as soon as somebody walks out of that bathroom if they flip that switch, the fan is off and you’re not getting rid of any odor or moisture. Another option would be having a fan with a timer switch right next to the lights. So tenants can shut the fan off in 60 minutes when they go in to start their shower routine. And by the time they’re done, so is the fan. So there’s a couple different options that you have there. When you talk about automatic fans or fans that are on a timer or something along those lines, really the biggest point here is just ensuring that you have some kind of an exhaust van in, your bathroom and that it actually vents to the outside in a lot of older homes in a lot of older bathrooms, you’re missing that ventilation altogether, which can lead to the mold buildup the mildew buildup that we all hate so much.
Andrew Schultz: (05:58)
It is kind of an issue. If you don’t have an exhaust man in a bathroom, I’m pretty sure modern building code requires you to have ventilation in bathrooms. So if you’re doing a bathroom rehab or something, that might be a good time to consider adding that ventilation in as well. And I did mention make sure that it vents to the outside. We’ve seen issues in the, where somebody throws the vent line up into an attic and just leaves it. Doesn’t actually vent it to the outside. Well, all that moisture is just dumping into your attic, which is just creating another headache for you down the road. So if you do have a bathroom vent, make sure it’s actually running where it’s supposed to make sure it’s exhausting the way that it should. And if you don’t have one, certainly considered installing one on your next bathroom remodel.
Andrew Schultz: (06:40)
My favorite tip from an operational standpoint is about key and lock control. I recommend skipping all the smart lock technology that’s out there right now. And I shouldn’t even say skipping it because it just doesn’t work for our business model. It might work for yours, but it doesn’t work for ours. The way that we’re currently set up, what we’ve been using is the quick set, 816 dual key deadbolts. These locks have two separate key one for the tenant. And one that’s covered up by a faceplate that you can basically rotate the faceplate and that will reveal the landlord’s key. It uses a different key. So the CA tenant can’t jam their key in there, even if they do discover that there’s a second key and it gives you access to the property whenever you need it. Basically, you have a master key that is completely separate from the tenants key.
Andrew Schultz: (07:24)
They have no ability to use that lock or stick their key into jam it up or anything like that. It’s a good way to keep constant control over your key situation and know that you have access to your buildings at a moment’s notice if you need it. If there’s an emergency, if they’re is a maintenance concern, whatever the case may be. So even if the tenant does discover the fact that there’s two key ways on that lock or that they can rotate the faceplate, it still doesn’t do them a lot of good because their key won’t fit physically will not fit into that lock. The other reason that I recommend these locks is because you can also remove your locking door handles at the same time, switch to a non-unlocking exterior door handle along with these deadbolts. And the reason that I would recommend that is that it basically eliminates 99% of your lockouts because they can’t physically lock the door unless they have the key outside with them.
Andrew Schultz: (08:14)
So there’s no more, I accidentally locked my keys in my apartment because you’ve physically had to have your keys, you in order to lock the door. So it does cut down on about 99% of your lockouts. We’ve had very, very few lockouts ever since we started using these quick set, eight sixteens, the locks do have the quick set re-key technology in them, which is nice because you can reset that lock to a new key in like 15 seconds between tens and it’ll take any standard quick set key. So any KW one cut key, which is the bulk of quick set keys defiant keys from home Depot, you know, any sort of a quick set, one style key will work in these locks. So you do have a lot of flexibility in the lock that you use, as well as the key that you use.
Voice Over: (08:57)
Water cooler wisdom, expert advice from real estate pros.
Andrew Schultz: (09:05)
Our first water cooler wisdom this week is an interesting one. It’s actually kind of a unique situation, but I think that there are probably a lot of landlords that are gonna be going through this right now. And essentially what we’re dealing with is a situation where you have a non-paying tenant that had a break into their unit with damages and how to handle that situation. Let’s go ahead and jump right in here. This one was brought to us via the landlord subreddit as well. A tenant emailed me claiming that somebody may have forcefully entered their unit. This is a squatter hiding under eviction protection. So it’s a very Rocky relationship at the moment. They’re claiming that the door locks are damaged. What are my obligations as the landlord? This is the type of person that may be scheming something. If I don’t handle this by the book.
Andrew Schultz: (09:48)
So this would fall back to what most states would refer to as warranty of habitability. And I’m pretty sure that every state has this or so something similar to it. So do a little bit of research on your own to find out what is required in your state, because it does vary a little bit from state to state, for instance, in some states such as New York, it specifies how you have to keep your indoor temperatures during the cold weather seasons. If you live in the south where it’s a little bit warmer, they may have requirements or your indoor temperatures during the hot weather months as well. So there’s different requirements depending on the state. You’re in a lot of things are climate-based and things like that. But there are just a general rule of things that need to be taken care of no matter what, which is kind of what we’re gonna be talking about here today, either way, a warranty of habitability is essentially the guarantee that the rental unit is in compliance with basic living and safety standards.
Andrew Schultz: (10:40)
Typically this is going to mean ensuring things like the unit has hot and cold water has heat or air conditioning. If it’s required has smoke and sea detectors has a working bathroom, locking windows, locking doors, et cetera. It’s a pretty basic list. I don’t think anybody here would argue the fact that that’s all stuff that a landlord should be in the business of providing as part of their rental unit. I don’t think that there’s any real argument on that. At least here in the state of New York, you’re responsible for maintaining the unit to a habitable state, regardless of whether or not your tenant is current on the rent. I’m gonna say that again, regardless of, or not, your tenant is current on the rent. You still have a warranty of habitability to that property. So keep that in mind. It does not matter if your tenant is current or if your tenant is not current.
Andrew Schultz: (11:30)
This obviously creates a lot of tension in situations exactly like this one, where someone’s in arrears and they need repairs during the pandemic. We’ve had to complete repairs on heating units, roofs locks, windows, et cetera, on a variety of different homes where tenants owe sometimes thousands and thousands of dollars, but we’re still out there doing the work because that’s, what’s required of us. Yeah, it absolutely sucks sometimes. And I’ve had very hard conversations with clients explaining to them that we do still have these obligations, despite the fact that this tenant is not paying their rent, but it’s also the business that you signed up for when you signed that lease or when you bought that rental property that had the tenant inside of it. So coming back to the root question, I talked to the tenant and asked them if they filed a police report and encouraged them to do so, if they haven’t done already, the police probably aren’t going to do anything here, but it is beginning to build a paper trail.
Andrew Schultz: (12:24)
If you will, after that, go check the locks on the windows and the doors to see if anything’s broken or missing. Make sure the key that you have to the units still works on all the door. If not, your locks may have been swapped by the tenant at some point, and you can use this as an opportunity to get key control over your asset. Again, maybe get some of those quick set, eight sixteens that we talked about in the forum quorum section. That’s a good opportunity to make sure that you have a good set of locks on the property. Either way, swap out locks is needed and give the tenant a key and retain a key for yourself while you’re there. It’s also a good time to inspect the rest of the unit to see if there are other damages or concerns that aren’t being reported.
Andrew Schultz: (13:02)
Other things that need to be addressed like leaky plumbing or running toilets, stuff like that. Again, I know it sucks to spend money on maintenance in a non-paying unit, but letting a plumbing issue go that at could turn around and cost you tens of thousands of dollars in damages down the road just does not make sense. There’s nothing that says that you have to provide Hilton-level service here to a non-paying tenant, but you do have to maintain that warranty of habitability as required in your state or in your region, whatever the case may be. And honestly, you should want to keep your building in condition that when you get it back, it’s hopefully not destroyed. And you’re gonna be able to turn around and Rere that unit, hopefully without, you know, major issues, make sure that you’re maintaining your major systems in your unit.
Andrew Schultz: (13:48)
Just so you’re preventing future damages while dealing with a non-paying tenant, hopefully, the moratoriums in your area and soon, and you’re gonna be able to seed with your eviction best of luck to you as you proceed. Our second water cooler wisdom this week also comes to us via the landlord. Subrata this one is all about security deposit, escrows, and what to do when your tenants not being compliant. Let’s go ahead and take a look here in one of the properties I had managed by an agent, the agent messed up and forgot to have tenant fill out a w nine form. This was only caught at the bank a week later, and since they needed need it, the form to open up the escrow account. Now the tenant is refusing to fill out the w nine form because they don’t want to share their full social security number.
Andrew Schultz: (14:30)
Not sure why we already have it from the credit check. So what do I do if they keep refusing, fill out the w nine form, do I put it in a non-interest-bearing account? And again, this one comes to us via the landlord subreddit. So if I’ve said it once I’ve said it probably a thousand times at this point, this is the exact reason why I harp on having a Premo in checklist that gets completed every single time you do a move in, then you don’t miss things like this. And it eliminates these issues from reoccurring in the future. We obviously learn best when we make our own mistakes, which is why this policy exists inside of our company. We had a tenant that didn’t turn their gas or electric into their name prior to moving into the unit. It wasn’t discovered until after move-in when we kept getting utility bills and none of them were final invoices.
Andrew Schultz: (15:16)
So we talked to the tenant and explained to her that per their lease, they need to establish their own gas and electric accounts. And they just flat out refused. It turned into an ongoing issue. And our concern was that we didn’t wanna terminate the services for two reasons. One, it was winter time and it would’ve left the unit without heat, which is pretty much the last thing you wanna do in Western New York. And number two, we were concerned that it would be considered the beginnings of an unlawful eviction or be seen as ran landlord retaliation, both of which were hot button issues at the time as the HS TPA legislation had just passed in mid-2019. And a lot of it had in. And honestly still hasn’t been through the courts at this point. So we did wind up getting it resolved. Our management company ended up eating some of the cost to keep the client satisfied, but really it was a gigantic mess.
Andrew Schultz: (16:03)
And ever since then, the day of move-in, we call the utility companies to verify that the utilities were changed over. And if the tenant has not changed the utilities over into their name, as of the day of move-in, they don’t get their keys, they don’t get to move in. It’s that simple. Essentially, you need to do the same thing here. If you need a w nine in order to open an escrow account, then it should be signed at the same time as your lease packet, your lead paint forms, your other disclosures, do it all at the same time, then it’s not an issue going forward. And if they don’t sign, they just don’t get to move into the unit. It’s that simple, it’s part of their lease packet. At that point, you need that in order to basically lease the apartment to them.
Andrew Schultz: (16:42)
It’s one of the requirements. Some people are probably wondering why you need a w nine for a tenant in the first place. Some banks will open an escrow account that has both you and the tenant listed on it. And generally speaking, the tenant, isn’t gonna want to go in and deal with that process at whatever time is convenient for you and for the bank and everything. So the way most banks will handle this is to have an account opening form that you fill out with the tenant alongside with the w nine, and then you can handle that whole process without the need for the tenant to be present. The bank can actually set the account on up based on that form and the w nine paperwork without the tenant, having to physically come into the bank to do that. Some states do, and some states do not require separate accounts for each tenant, each property, whatever.
Andrew Schultz: (17:25)
The w nine is likely because there is interest being earned on the account. And we all know that the interest rates are just so ridiculous. The high on these accounts that, you know, that tenants thousand dollars security deposit might be worth a thousand dollars and 5 cents next year. And uncle Sam wants his cut of that interest. So that’s really the reason that you have to do the w nine and go through that process. Different states have different escrow laws, especially when it comes to interest-bearing versus non-interest bearing or how funds have to be handled or things like that. My recommendation here would be take a look at your state law to determine what the requirements are. In this instance. I would probably open a separate escrow account for this deposit and leave it there. So it could be returned back to this tenant and move out.
Andrew Schultz: (18:09)
Their name may not be on the account, but they, you know, they’re going outta their way to make you non-compliant essentially, and the funds are still a liability on your books, regardless. It’s just the physical location of the money. That’s at question. And I think that that would resolve the issue. But realistically speaking, I think if you cannot get a tenant to comply on something like this, look into what the laws are for your state or region, and then talk to an attorney that’s well versed on this and get their opinion on it as well, just to make sure that you’re not doing something that puts you in hot water run prep recently released a guide on how to successfully post your rental properties to Craigslist, including the advertising rules, how to write a great description and more check that out today, over at rentprep.com/blog.
Andrew Schultz: (18:53)
That pretty much wraps up this episode of the Rent Prep for Landlord’s podcast. Thank you all so much for listening. We truly do appreciate it. Our goal with the podcast is to help as many people as possible make educated decisions when it comes to real estate, and you can help us to reach our goal. If you heard anything in this week’s episode or any other, so 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 own Buffalo, as well as other projects that we’re working on. We just launched a free investment property deal analyzer, which is available on that site whatsdrewupto.com. Again, it’s truly free.
Andrew Schultz: (19:32)
There’s no obligation whatsoever. And I also filmed a companion video that shows you how I analyze deals and how to use that tool. If you’re looking for top-tier tenant screening services, head on over to rentprep.com, there are multiple products to choose from including tenant-paid options. And if you’re over 50 doors, ask about the enterprise-level programs and pricing. I’ve been an enterprise user of Rent Prep for years now, and it’s definitely changed the way that we screen our tenants. Check that 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 wanna miss until then. I’m Andrew Schultz with ownbuffalo.com for rentprep.com and we’ll talk to you soon.