Q: Gerald, my daughter has been working for ten years since college and still can’t afford to buy a home. Is there anything on the horizon that will make it easier for first time homebuyers to buy? Jessica, Fishkill, NY A: Jessica, since the financial crisis, banks have tended to cater to wealthier, higher income customers, however, jumbo loans, which are mortgages too large to be sold to Fannie Mae and Freddie Mac fell by more than 10% last year. The jumbo market does not have the demand it previously did–refinancings have slowed and the new tax law with limits to SALT deductions has reduced incentives to buy larger homes. Some banks have already begun to embrace multi-generational home loans, […]
continue reading Q: Gerald, we have never allowed pets in our rentals, but lately we’ve been getting more tenant applicants with pets. Do you think we should start allowing pets in our rentals? Stacy, King Of Prussia, PA A: Great question, Stacy. First and foremost, you should think through your property management policies and procedures long before you even take rental applications because it makes decision-making much easier. I have been a landlord for almost 20 years and have never allowed pets either because of the damage that pets can do to a property. In some local real estate markets you can mitigate the risk of allowing pets by making tenants with pets pay an additional security deposit, in other local markets […]
continue reading Q: My tenant wrote me a check to pay his rent and the check bounced. What should I do? Eric, Orlando, FL. A: The best way to deal with situations like this is to have a property management policy in place that is written in the lease you have your tenants sign that addresses this potential issue before it actually happens. Now, if done correctly your lease will entitle you to charge a reasonable fee that should cover your bank’s bounced check charge, and then a little more for the hassle of dealing with the problem. I charge tenants a fee for writing a bad check–it’s written into my lease and I also stop accepting rent by check after a […]
continue reading Q: I’m looking for the right local real estate market to invest in. What do you think about using price-to-rent ratio to decide? Devon, Palo Alto, CA A: Price-to-rent ratio is the average ratio of the median purchase price divided by the median (average) annual rent in the area and is a measure that can be used to compare local real estate markets: Price-to-Rent Ratio = Median Sales Price/Median Annual Rent The usefulness of any calculation boils down to how accurate and representative the input data that goes into it is. One problem with using this ratio is that properties even within one local market are not uniform–there can be a huge variety of property types, property conditions and prices […]
continue reading
A property owner must manager his property manager. Regardless of how much responsibility you choose to delegate, when you own property, the buck ultimately stops with you.
continue reading Q: Gerald, some people say section 8 is great for landlords and others say it’s a disaster. Should I rent to section 8 tenants? Shane, Scotch Plains, NJ A: Although the Fair Housing Act doesn’t offer protection to tenants based on their source of income, more and more places in the US are adding that protection to local fair housing rules. Legal or not, I don’t think it’s smart business to disqualify a potential tenant based on their source of income. There are good and bad tenants within any group of applicants. One of the keys to being a successful landlord is having a well thought through, repeatable process to screen tenants. Section 8 is almost guaranteed money for landlords […]
continue reading When you rent a property, set up all appointments to show the property at the same time. This saves you time and creates more urgency for tenant applicants to make a decision.
continue reading Q: We just got back from vacation. While we were away we saw a property that I think would be a great rental investment. What do you think? Caroline, Bogota, NJ A: Property management is a hands-on endeavor and is challenging enough when your property is located near you. Managing property far away is more challenging and real estate expenses often end up costing more than they would in your local area. This doesn’t mean you can’t handle owning properties in far away places, it just means it’s more precarious. When you are a long distance landlord, the success of your investment is more dependent on your property manager and local team of contractors and handymen on the ground than […]
continue reading Q: Gerald, my wife and I are looking at buying a home–we haven’t decided whether we want to live in it or rent it out but thought we’d ask if there are any red flags we should look for to avoid? Kendrick, Columbia, MD A: Great question, Kendrick. There are a few red flags that I use to disqualify properties to buy–here are 3 of them: 1. Property with leaking or compromised oil tank (expensive environmental hazard) 2. Property located next to gas station (expensive environmental hazard) 3. Property located next to dry cleaners (expensive environmental hazard) If you have experience resolving these kinds of issues, these conditions may present an opportunity for you as an investor–for example, I met […]
continue reading Q: Gerald, we are buying a tenant occupied rental property. Do you have any advice for us? Carly, Weehawken, NJ A: When you buy rental property, you will often inherit existing tenants. The very first property I bought had a tenant living in it with a lease—although I initially planned to live in the property, the lease was still in effect when I closed so I became a landlord. Because you don’t know anything about the tenants already living in a rental property you buy, it’s important that you protect yourself. Here are 3 things you must do when you inherit tenants in a rental property: 1. Verify Rent Roll Rental property owners often misrepresent or outright lie about their […]
continue reading Despite what many real estate novices mistakenly believe, The Grinch would not be a successful landlord. Here are 3 landlord myths that the Grinch might employ that are financially counterproductive to landlords in the long run. Myth#1: To be a successful landlord, you have to squeeze every last dollar out of rents. Greedy landlords have vacant apartments. The market decides how much rent you’ll get as a landlord not you—the person with the money (in this case, the tenant) always decides the price. Being greedy as a landlord exacerbates vacancy. One extra month of vacancy resulting from holding out for slightly higher rent will often wipe out any additional rent you could collect for the year. The most successful landlords […]
continue reading Before you renovate an apartment or house have the occupants move out–the renovation will go smoother and take less time.
continue reading Q: Gerald, my wife and I want to buy a rental property. Expensive neighborhoods, middle class neighborhoods or blighted neighborhoods: which neighborhood type is best to buy rentals? Clayton, Cliffside Park, NJ A: Clayton, the key to success as a landlord does not necessarily lie in the economic landscape of the neighborhood you choose to buy your rental property in. Success lies in the specific strategy you execute and implement as a landlord which should at least in part be based on the economic character of the neighborhood where your rental property is located. There are successful landlords in expensive high-end neighborhoods, working class areas and blighted neighborhoods and there are unsuccessful landlords in expensive, working class and blighted neighborhoods […]
continue reading Landlords beware of a prospective tenant who has no landlord references or has a reference that is too good to be true. A too-good-to-be-true reference may indicate that the previous landlord just wanted to get rid of a bad tenant by transferring their headache to another unsuspecting landlord.
continue reading Before you rent a property look at other rental ads online for similar properties so you can see what your prospective tenants are seeing.
continue reading
Managing property far away tends to be more challenging than close by, and real estate expenses often end up costing more than they would in your local area.
continue reading As a landlord, don’t necessarily take the first tenant prospect who expresses interest in renting your property. Eager tenants who show up with a fist full of cash eager to move in right away may have just been evicted.
continue reading As a landlord, offer tenants a rent discount for handling minor property repairs themselves. This will save you money in the long run, particularly if you are a long-distance landlord.
continue reading Q: Gerald, I recently evicted a tenant. The tenant was months behind on rent and they really trashed the property. Should I go after them for my legal and court costs? Philip, Huntington Valley, PA A: Great question, Philip. In my view, charging delinquent tenants for legal and court costs first and foremost depends on whether you can legally charge for those costs where your property is located–landlord tenant laws vary widely from place to place so it’s your job to do the research to find that out. Assuming you can legally charge delinquent tenants for legal and court costs, the decision to do it or not depends in my view on how much those costs are and how much […]
continue reading In order to reduce rental property expenses, tighten up your rental lease to make tenants responsible, in writing, for property damage that occurs while they occupy your property.
continue reading In order to increase rental income, install coin or card-operated laundry machines in your property’s common area.
continue reading To be a successful landlord, your rental property must be appealing to good, paying tenants, which necessitates considering both qualitative and quantitative factors.
continue reading Effectively screening tenant prospects is critical for landlords to maximize rental income.
continue reading As a landlord, it’s best to have a thorough written rental policy that uniformly applies to all tenants and all tenant applicants.
continue reading Q: Gerald, I use airbnb for lodging when I travel sometimes. The tenant in my rental property is moving out soon–does it makes sense to convert my rental property into an airbnb property? Kendra, Roxbury, MA A: Great question, Kendra. Does it make sense to convert a traditional rental property into an airbnb property? I’m familiar with airbnb because I use airbnb a lot when I travel because I prefer to stay somewhere that is more like home rather than a hotel room. There are investors now that actually look for investment properties to buy specifically to offer on airbnb, VRBO, homeaway or other real estate app platforms. The main issue you have to recognize if you switch from a […]
continue reading Rental supply in Toronto is down to two weeks, meaning it would take that long to rent everything in town, and average rents have hit an all-time high.
continue reading If you hire a property management company to manage your real estate, make sure your property management agreement has the following 3 items: 1) Roles & Responsibilities 2) Payment Terms & 3) Termination Clause.
continue reading Q: My cousin’s tenant wants to break his lease. I know a lease is a binding contract, but are there any good reasons to let a tenant break a lease? Quincy, Chesterbrook, PA. A: That’s a great question, Quincy. And you’re right, a lease is a binding contract. But to be an effective landlord, you have to embrace the world as it comes at you and not get bogged down in the theoretical idealism of how things are “supposed to be.” So, I’m going to give you an example where it would make sense to let a tenant break their lease. Let’s say you have a tenant and the tenant lost their job – they can’t pay the rent. Let’s say […]
continue reading Don’t rent to tenants who have been previously evicted.
continue reading If you allow the seller to stay in a property you are buying after the closing, make sure you have an airtight occupancy agreement that clearly spells out the dates of occupancy and the consequences for failure to abide by those dates.
continue reading New Jersey office landlords have been adding urban amenities like food trucks and fitness centers to stay competitive.
continue reading Before you buy rental property in another state, check to see if that state requires a real estate license to manage the real estate of another person or entity.
continue reading A property owner must manage his property manager–regardless of how much responsibility you choose to delegate, when you own property, the buck ultimately stops with you.
continue reading When you rent a property, set up group appointments so all the prospective tenants come at the same time. The prospective tenants may bid up the price of your rental and allow you to rent for a higher price.
continue reading Q: Gerald. My tenant missed a rent payment–he’s a good tenant and he’s always paid on time. He’s only 5 days late, but I’m worried. What should I do? Curt, Washington, DC A:Great question, Curt. Should you give more slack to a good tenant? Hell yeah, you should! Why? It’s not just for sentimental or to maintain good Karma reasons–although I have no problems with letting those things enter your mind. Remember my 1st real estate commandment: ”Real estate is more about people than it is about bricks & mortar.” (You can check out my other real estate commandments here: http://www.performanceproperty.com/about/) As CS Lewis said, “In our hearts we all know what’s right.” There’s nothing wrong with having empathy as a […]
continue reading Q: Gerald, we just bought a rental property and I want to prepare myself for any eventuality. How long does it take to evict a tenant? Phil, Stamford, Ct. A: Landlord-tenant laws vary significantly from place to place, so the eviction process varies significantly from place to place as well. Tenants generally are allowed more time if the eviction is without cause, as opposed to evictions with cause. An example of an eviction without cause would be an eviction to allow a landlord to renovate a property. An example of an eviction with cause would be an eviction for non-payment of rent. In some places, there are eviction moratoriums during certain times of the year like around Christmas. Nobody, no […]
continue reading Q: Gerald, I heard you say that your new real estate fund invests in real estate and mortgage notes. How can a landlord like me benefit from mortgage notes? Henry, Kalamazoo, MI. A: Landlords can use their rents as collateral in a collateral assignment, which allows them to securitize and borrow against their rents as a landlord. Gerald Lucas & mortgage note expert, Fuquan Bilal reveal what every landlord should know about mortgage notes in this installment of Ask Gerald A Real Estate Question.
continue reading Q: Gerald, I just bought a rental property. Where can I get a good landlord-friendly lease? Monica, Oakland, CA. A: Finding the ideal rental property lease can be tough. There are many different types of rental leases that serve different purposes. Landlords generally want rental leases that protect their interests and leases are often written to favor one party or another, so landlords often look for landlord-friendly leases. However, in addition to protecting your interests as a landlord, it’s important to analyze your rental lease through the eyes of a judge, because if your lease isn’t deemed reasonable for both parties, then a judge is less likely to enforce the terms of your landlord-friendly lease. Also, landlord-tenant laws vary enormously […]
continue reading Buy a personal liability insurance policy if you own rental property to protect yourself from lawsuits.
continue reading If you own rental property, monitor market rents where your property is located by looking at rental ads online so you can see what your prospective tenants or current tenants are seeing.
continue reading Put money aside for property maintenance. Two pricey items to focus on for property maintenance are your roof and your heating and cooling systems.
continue reading When you rent a property, set up all appointments to show the property at the same time–this saves you time and creates more urgency for tenant applicants to make a decision.
continue reading Q: Gerald, I’m about to buy a rental property and I was wondering if students make good tenants? Julian, King Of Prussia, PA A: Great question, Julian. First and foremost, you should always screen potential tenants regardless of what your general strategy is as a landlord. Your strategy as a landlord should be guided by the specifics in your local real estate market where your rental property is. If your rental property is in a college town, students may be the ideal tenants, however, since students tend to be more transitory, you’ll need to budget for higher turnover costs (painting, carpeting, wear and tear) and since younger students often don’t have credit history, you should consider requiring co-signers with established […]
continue reading As a landlord, it’s best to have a thorough written rental policy that uniformly applies to all tenants and all tenant applicants.
continue reading Keep the area around your property in neat condition with grass cut as towns often issue fines for overgrown or messy properties.
continue reading Q: Gerald, I have a tenant that’s been a nightmare ever since she moved in–she’s always late on rent, only pays after I threaten to take her to court and she bothers and harasses the other tenants in the building. What should I do? Mattie, King Of Prussia, Pennsylvania. A: A healthy landlord-tenant relationship must be a symbiotic one. If you want good tenants, you have to be good landlord and it’s important as a landlord that you set and manage expectations from the beginning. That said, if you have a problem tenant, it’s normally in your best interest if you can to work out an agreement with the tenant to leave and avoid having to go to court where […]
continue reading Q: Gerald, my insurance and property taxes on my rental property went up this year and I’m barely breaking even every month. How can I make more money to offset these expense increases? Jason, Ridgewood, NJ A: Great question, Jason. The first thing you should look at is potentially increasing rents at your property, but you have to be careful because your ability to do that will really depend on your local rental market demand because as I’ve said many times before, the person with the money decides the price. In this case, potential tenants have the money and ultimately decide rental prices. So, if you raise rents way above what similar properties in your area are going for, your […]
continue reading Q: I own rental property and my insurance broker recommended I look into landlord liability insurance? What does landlord liability insurance cover? Cliff, Wayne, PA A: Good question, Cliff. Landlords can be hit with legal claims that can result from various causes (for example if someone slips, falls and gets hurts on your property). Not to be confused with homeowner’s or property owner’s insurance, landlord liability insurance covers the cost associated with your legal defense as a landlord. Landlord liability insurance helps you to protect your rental property investment in the event of a liability claim filed by a tenant or a visitor to your rental property. Thanks for your question, Cliff! For more real estate tips and information […]
continue readingAlways ask to see any existing leases for any rental property you are considering for purchase. If you buy the property, you will be subject to the terms of those leases. Make sure the leases match the seller’s representations.
continue reading