Month-to-Month Means More Money!
Landlords often use month-to-month agreements because it offers them more flexibility and the ability to evict faster if a good apple turns bad. However, one of the biggest potential benefits that most landlords do not take advantage of is that offering residents the option of a month-to-month rental agreement should mean more monthly income to the landlord. Why? Because it is for a shorter term than the traditional 12 month lease. Since residents can move out at anytime with just a 30 day notice, it has more risk for you the landlord.
At a bare minimum, I would suggest charging at least $25 to $50 per month to residents who prefer a month-to-month agreement. Some of you have leases that turn into a month-to-month after a year and you do not charge them any kind of premium for that privilege. Instead, charge them more if they prefer it to switch over to a month-to-month, instead of renewing for another year.
Some landlords charge a monthly premium of $100 or $200. I read recently of one successful landlord who charges a month-to-month premium of $300. You could also consider charging a premium based on a percentage of the monthly rate, say 5 to 10 percent. My challenge to many of you today is that you should be charging MORE for month-to-month (shorter-term) leases. Be sure to check if this is legal in your state. Of course, it is still vital to fully screen all residents so that you know they are qualified and able to pay more.
How to Get More Money Owed from Former Tenants
One of the top ideas shared this month on the MrLandlord.com Q&A Forum was a tip regarding how to deal with former residents you evicted who owe you money that you’ve brought back to court. The following idea is shared by one of the regular contributors on our forum who continually challenges other landlords to learn in YOUR state how to collect the most money due even AFTER a former tenant moves out. Here’s the tip below as shared by the landlord:
Many times, (every time) while in court suing an ex-tenant for damages the law requires us to “go outside” and try to come to an agreement. This is what my manager (my gold mine) does.
Let’s say the tenant owes $5,000 in rent and damages – it’s been three years at 15% on that debt with a collection of 25%. For argument sake, let’s say the debt is now $7,000. First out of the gate is an offer to knock it back to $3.5K with no ADDITIONAL interest with payments of $100.00 until paid. The management is offering this in good faith and is willing to take less with the STIPULATION that no payments are late. The ex-tenant pays in a timely manner. Should the tenant not pay as agreed to here, then the full amount will become due along with past interest forgiven. Everyone is happy.
The judge looks it over and everybody signs. The judge has even asked in open court of my manager – are you sure this is all you want? “Yes your honor.” Four months later no payment is received and BAM! Now, the whole debt is due and guess what? No court. Why? Because we’ve already been to court and agreed to the ‘consent’.
Are Your Homes Hot Enough?
The title was not a tease. Are your homes literally “hot” enough? The weather has gotten very cold in many areas of the country. Some rental residents are contacting their local code and health inspectors complaining that the landlord or the rental property is not providing adequate heat. I encourage landlords to make sure you know what you or your property must legally provide. Requirements and laws change from state to state and sometimes differ in neighboring communities. I know that I was initially ignorant of what exactly the requirements were when it came to how much heat my properties must be able to provide. Once I was fully aware, I could better service my customers and yet not be intimidated by false accusations of insufficient heat by renters.
For example, in my state, Virginia Uniform Statewide Building Code, Section 602.2 Heat supply: Every owner and operator of an apartment building or other residential building who rents, leases, or lets one or more dwelling unit, rooming unit, dormitory, or guestroom on terms, either expressed or implied, to furnish heat to the occupants thereof shall supply heat during the period from October 15 to May 1 to maintain a temperature of not less than 68°F (20°C) in all habitable rooms and bathrooms. However, that requirement will vary from state to state.
If the landlord provides a heating system or units of some kind in the property, states may require that the system/units be able to maintain minimum temperature during the day and another minimum temperature during the evening. For example, from October to May, one state (which may vary from city to city) may require that the heating system or units must be capable of maintaining at least 68 degrees F between the hours of 6:00 AM and 10:00 PM, and at least 60 degrees F during other hours.
These are all just examples. My major point is that, as a landlord, you need to know what you or your property are legally required to provide so that you can make sure you provide it and that you’re are not blindsided by a lack of knowledge of your responsibilities. Google “What is the minimum temperature landlords must provide in winter for rental property in your state” to obtain information. Also, please be aware that just because the thermometer may say a certain setting in your rental property, the real test is whether the temperature in the rooms matches whatever the minimum requirements.
A landlord who knows what is required operates from a position of strength, which is far better than operating in ignorance. As a landlord, you need to know what is required of you so that when renters demand more, you will not be intimated. This is especially true when you are dealing with residents who are seemingly uncooperative types who display angry or nasty attitudes when communicating about any maintenance related issues.
This brings up why I also encourage and emphasize to landlords screening prospects to gauge the applicant’s potential “cooperation” level. How cooperative a resident will be in your property can be the difference between enjoying being a landlord and being frustrated by their non-cooperation.
In dealing with maintenance issues, whether the heating system is adequate or a clogged kitchen sink, things work out so much more smoothly if residents are cooperative and patient in communicating with you and don’t repeatedly contact you with an angry or a nasty attitude while the problem is being resolved. So, while it is important to always do a credit, rental, and criminal background check (especially since they are so cheap to do) on your rental applicants, look for small signs that may indicate whether the applicant will be the cooperative type.
The tips in this column are shared by regular contributors to the popular MrLandlord.com Q&A forum, by real estate authors and by Jeffrey Taylor, Founder@Mrlandlord.com. To receive a free sample of Mr. Landlord newsletter, call 1-800-950-2250 or visit their informative Q&A Forum at LandlordingAdvice.com, where you can ask landlording questions and seek advice of other rental owners 24 hours a day.