Defining Normal Wear and Tear for Apartment Owners

Simply living in a rental place will eventually lead to scuffs, scrapes, and stains. The longer a tenant lives in a property, the more potential there is for accidents and everyday deterioration.

In America, the onus is on landlords to understand that a certain level of wear and tear is unavoidable and an expected aspect of renting out their unit or home. Despite this, many landlords are sticklers and it is not uncommon for property owners to try and withhold a security deposit for minor concerns, leaving their tenants in a financial predicament.

To combat these cases, many states have implemented legislation that safeguards tenants from this type of unfair treatment— making landlords potentially liable if they do not adhere to the applicable regulations.

When approached correctly, disputes can often be avoided, and if they do occur, can be resolved more easily and quickly, making the rental experience more enjoyable for both tenants and owners.

What is Normal Wear and Tear?

In a nutshell, normal wear and tear refers to any damage that takes place as the result of aging and/or regular usage.

It’s important to note, however, that each case is unique. This means that if a landlord and tenant dispute is handled in court, it will be up to the judge’s discretion to determine if an inappropriate amount of damage has occurred.

It’s also important to remember that laws differ from state to state, so rulings relating to these types of issues can vary significantly.

For the purposes of this explanation, though, we’ll be sharing an example that is more definitive.

EXAMPLE:

Small nail holes and minor scrapes in wall paint would be considered usual wear and tear, while large, gaping holes in gyprock would be considered excessive damage.

Understanding Normal Wear and Tear VS Excessive Damage

It isn’t always easy for a landlord to determine when an issue qualifies as excessive damage, or when the responsibility should fall on the tenant to repair a particular concern.

Below are some guidelines that can assist with differentiating between ordinary wear and tear and unreasonable damage:

Wear and tear does NOT include damages that occur as a result of a tenant’s negligence, abuse, or accidental destruction.

Wear and tear does NOT include damages that occur as a result of negligence, abuse, or accidental destruction by a tenant’s guests or pets.

Excessive damage does NOT include the cost of regular maintenance and repairs that must be completed after a tenant moves out and prior to another tenant occupying the space.

Examples of Normal Wear and Tear

To further clarify the normal wear and tear definition, below are some common issues that landlords would NOT be justified in deducting from a tenant’s security deposit:

• Carpet deterioration caused by foot traffic, normal use, etc.
• Broken cords on blinds or curtains
• Fading on carpets or flooring caused by sun exposure
• Non-functional light bulbs, wiring issues, etc.
• Loose door handles, hinges, cabinetry, etc.
• Leaky toilets
• Broken light switch plates

Examples of Excessive Damage

Below are damages that would NOT qualify as normal wear and tear rental concerns:

• Excessive amounts of pet urine on carpets
• Smoke or burn marks from cigarettes on flooring, walls, etc.
• Broken or missing cabinet doors
• Unauthorized renovations
• Gaping holes in walls, doors, etc.
• Smashed mirrors, broken window glass, etc.
• Clogged toilets as a result of improper use

Examples of Regular Maintenance

It is unlawful to claim regular maintenance as security deposit wear and tear, since landlords assume responsibility for a certain level of property upkeep when they make the decision to rent their space.

Below are some examples of projects or activities that would be considered regular maintenance:

• Rodent or insect exterminations
• Repairing of water damage or leaks
• Installation of functioning fire and carbon monoxide detectors
• Gutter cleanings
• Sprinkler system repairs
• Safety inspections
• Replacing fire extinguishers
• Updating or replacement of kitchen appliances

If you aren’t sure whether or not an issue qualified as reasonable wear and tear rental concern, it’s always advisable to seek a second opinion.

Too often, landlords bring their case to court, only to realize their definition of wear and tear rental property issues differs from the definition set forth by the law.

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Important Things to Consider When Renting Out Property

To avoid problems, owners should be mindful of the things that can affect the rental value of their property.

Tenant Reference and Employment Checks

This should go without saying, however, too many landlords meet prospective tenants in person and trust them because they are nice and affable people.

Systems Failing and Things Breaking

Have a plan before things break and systems fail. Build relationships with plumbers, electricians, handymen, etc., creating a strong network of vendors that you can trust.

Eviction Rights

Don’t rent to anyone you can’t evict. Who rents your home will make or break your rental income?

Realistic Rent Amounts

Check local rental listings to find out what you can realistically charge. If you want to find a good tenant, the rent must be comparable to the going market rate.

Local Laws

Landlords will be tempted to rent more space than is locally allowed, such as a finished basement that is not approved as a legal unit.

Your Investing Goals

One thing many first-time landlords forget to do is define their investing goals. We certainly did this with our first rental property.

If the Numbers Work

Before you get emotionally invested in the idea of converting your home into a rental, you have to run the numbers.

Condition of The Home’s Maintenance

In assisting a client with finding a rental property, you must consider the condition of the home’s maintenance.

Getting Long-Term Tenants

Consider finding tenants that are interested in longer-term leases as this will save you time and money in the long run.

Renters Insurance

Make sure that the tenants who rent my clients’ properties have rental insurance coverage.

Vacancy Costs

Remember that pricing a property at market rate helps you become cash flow positive sooner and lowers vacancy costs.

Home Warranty Plans

Becoming a landlord? Be sure to pay a few hundred dollars a year on a home warranty plan that covers repair costs with a minimum fee upfront and make the tenant pay the fee each time.

Property Inspection

Getting a property inspection prior to tenants moving in is always a good idea.

Winston Rowe and Associates provides consulting services for commercial real estate investors nationwide. Review them on line a www.winstonrowe.com 

Landlords Steps To Prevent Tenant Lawsuits

Rental property ownership can be a rewarding path to financial freedom. However, whether the property is a vacation rental property that has tenants only renting for short periods of time, or an apartment building with year-round lessees, managing an investment property can also be intimidating,

Without prudent safeguards in place to shield against lawsuits from tenants, the landlord can be held personally liable for lawsuits stemming from the property ownership.

Landlords can protect their investment property from tenant lawsuits if they set up their business under the protection of a Limited Liability Corporation or LLC. This will protect any personal assets against a lawsuit from a tenant against the property.

A carefully drafted rental agreement, or lease, dictating precisely how the tenant is expected to treat the property is a necessity. Adding a clause that would make it necessary for arbitration instead of court is advisable.

Another layer of protection is an insurance policy for the property that includes liability coverage. That way, it is quite possible that the insurance company will show up in court to defend the lawsuit, should one occur.

To avoid premise liability lawsuits, landlords should also comply with all local fire and building codes. Routine inspections with local inspectors of all systems (think: fire alarms, CO2 alarms, hot water heaters, etc.) are advised to have on record annually. Being aware of any hazards such as trip hazards, lead paint, or chemical leaks, and not warning the tenants or removing the hazard can also lead to a lawsuit.

Discrimination is another area that can lead to lawsuits. Be familiar with the Fair Housing Act, or FHA, which not only states that landlords cannot refuse to rent based on race, religion, nationality or gender but also based on disability status.

Multifamily properties must also be accessible to all disabilities, per the FHA. Any requests made for disability modifications (within reason) must be granted.

Security deposits can be a major dispute between tenant and landlord. When a tenant leaves their rental property, they are expecting a quick return of their security deposit. Disputes over the cost of damages or repairs could lead to the tenant suing a landlord.

Doing a pre and post rental walk-through with the tenant and providing an itemized list of the damages and necessary repairs can minimize the risk of litigation.

Another important strategy to avoid tenant lawsuits is compliance with state laws and what they say about security deposits.

Investing in rental property can bring a lifetime of reliable income. Capable property management is important to protect that income from tenant lawsuits. If overwhelmed, to help with the day to day management, there is the availability of property management companies to assist.

With the right systems in place, the proper compliance techniques, and the best business practices, a landlord should be able to operate a successful and litigation-free property for many years.

Appealing To Millennial Renters Who Wish To Remain Child-Free And Mortgage-Free

Apartment Building Investing

If you own or manage rental properties, your ideal tenant is likely a young, gainfully employed person who plans to rent long-term.

Luckily for you, this dream occupant comprises one of the largest renting demographics: millennials.

According to Pew Research Center, 74% of them are renters. And given that the same study states that they’re also less likely than other age groups to move once they’ve found an ideal rental space, marketing your properties to millennials is a great way to attract reliable, long-term tenants.

Most millennials view home ownership as a risk they’d prefer to avoid. Many have amassed stifling levels of student loan debt and, having come of age during the 2007-2009 credit crisis, are more cautious about investments.

This is good news, but it also means that appealing to this market requires a nuanced marketing strategy. Here are five guidelines:

1. Become Tech Savvy

You need an online strategy that includes not only websites like Craigslist, but also top rental sites and social media platforms. The importance of the latter cannot be overstated: Over 76 million millennials in the U.S. are on social media.

Be sure to include numerous high-quality photographs (preferably professional) with your listing. Write-ups should be thorough. Applicants should be able to apply online and easily ask questions.

In addition to offering prospective tenants a seamless online experience, be prepared to upgrade the technology available to current residents. Wi-Fi is a must, and such things as USB-equipped wall plates or keyless entry have great appeal.

2. Go Eco-Friendly

According to research by Nielsen, millennials care deeply about and allow their purchase decisions to be influenced by a company’s environmental focus. For property owners, that means it is best to use digital statements, communications and marketing.

Energy efficiency should also be top of mind. Install solar panels to curb electricity costs, and switch to Energy Star appliances, energy-efficient lights and self-regulating thermostats.

Building materials are equally important, and the use of paints and construction materials with low or no volatile organic compounds (VOCs) will be viewed favorably.

If your property is close to public transportation and can thus reduce driving and carbon emissions, say so. It’s also worth mentioning if your corner of the city or town features bike-sharing programs, bike lanes or walking trails.

3. Allow Pets

While properties have had the luxury of restricting pets in the past, shifting priorities among younger generations have made it a real handicap to ban animals. Millennials may not want to own houses or cars or become parents, but they are the largest demographic of pet owners.

Therefore, it’s wise to adopt a lax pet policy and ensure that whenever opportunities arise to reassess furnishings or to renovate, pet-friendly materials are chosen.

Certain flooring and fabric options tolerate pet accidents better than others, and choosing those will likely prove more lucrative than preventing renters from co-habitating with their furry family members.

4. Promote Neighborhood And Lifestyle

Location is everything, and when you’re describing yours, it’s imperative to think through the elements of your neighborhood and the lifestyle they beget. If you’re in the city, highlight walk-ability and access to co-working spaces, nightclubs, breweries, parks or other places where young professionals will likely congregate.

Likewise, if your rental is outside of the city, advertise it as a quiet retreat that’s close to nature, where residents can decompress.

Make a list of everything your area offers that could interest people in their 20s and 30s, and include them in the descriptions of your property.

This demographic is very interested in their proximity to work and their options for play, so focus should be placed on those neighborhood conveniences rather than school districts or safety.

5. Offer Better Amenities

It’s time to assess what conveniences you are offering to tenants. Installing a washer and dryer can often be the best and easiest way to add value to your property. Parking (especially of the off-street variety) is another priority for most tenants.

If you own older buildings, you’re likely competing with newer rental properties that offer glitzy amenities like gyms, pet spas, swimming pools or room service. Ensure that you’re competing to the best of your ability by offering as much as your checkbook and your property can reasonably accommodate.

Older buildings typically benefit from having larger units than newer construction. Coupling that space with a handful of alluring amenities positions properties to go head to head with the newer, luxury-branded options that are emerging across the country.

Community spaces are also really important for young professionals, especially unmarried individuals who are seeking opportunities to meet new people and congregate with friends.

Having built-in communal areas like shared decks, lounges or gardens can make a huge difference with millennials. Perhaps your property could accommodate a fire pit, a grill or a garden. Or, if you’re lacking outdoor space, consider transforming an unused room into a game room, fitness center, library or kids’ playroom.

Whatever you decide, remember that millennials are longer-term tenants who expect their apartments to offer all the comforts of home (if not more).

While all of these suggestions aren’t going to apply to every millennial applicant, and many might not be cost-effective options for you, every landlord and property manager needs to be thinking about how to maximize their properties’ assets in the context of these millennial-friendly features.