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Maine Landlording During the COVID-19 Pandemic

Maine Landlording During the COVID-19 Pandemic

 

We are six months into the COVID-19 pandemic, and it does not appear as though its going anywhere any time soon.

 

The pandemic has affected individuals and businesses alike, all around the country. As a landlord, you may be especially hard hit and impacted in numerous ways.

 

As property managers, we have had to adapt and change our way of doing our routine day to day business in order to ensure we are complying with the new rules, regulations and guidance and ensure the safety and health of our employees, tenants and clients. In this post, we will give you some advice on how you can do the same, as a Maine Landlord, during the COVID-19 outbreak.

Legal issues

               

Local, state, and federal regulators have and continue to take action, by setting rules, regulations and guidance, in an attempt to mitigate the health risks. Laws are being created, changed, and modified it seems almost daily. Some of these laws and regulations affect your rental property and you as a landlord. Because of this, its critical that you keep up to date on this ever changing and evolving situation. As always, we recommend you seek the advice of a qualified legal professional to ensure you are complying. Non-compliance could be costly to you. 

Hygiene

 

Strict hygiene standards will help protect you from contracting the virus and can limit the spread. If you must enter one of your tenant’s units to conduct maintenance, inspections etc. it is important to follow a strict hygiene protocol.

Below are some ways to help prevent the spread of the virus:

  • Disinfect: All types of surfaces can contain the COVID-19 virus and its important to sanitize all surfaces you have contact with after you finish the tasks. Pay special attention to doorknobs and light switches.
  • Hand washing: We have heard it time and time again. Wash those hands using proper handwashing techniques. Use warm water and soap for at least 20 seconds. Some experts have said this is the single most important step in preventing the spread of COVID-19. If you are unable to use soap and water, use an alcohol-based hand sanitizer with at least 60% alcohol.

Continued communication

 

Chances are, your tenants and prospective tenants are concerned about the spread of COVID-19. Its important to keep them updated on how you are handling things such as cleaning and sanitizing common areas and units in between tenancies.

You should also keep them informed about your process if you or a maintenance professional need to enter their unit to do repairs or maintenance. Its equally important to continue to maintain their unit and commit to a quick response if there is an emergency, just as you would before the pandemic. Tenants need assurance, for example, they need to know that they will not be left without heat in the dead of winter because no one will come to fix the issue.

 

Communication is key, now more than ever!

 

Your tenants need some reassurance that their calls, messages and emails will still be answered, and their problems addressed.

 

Keep an Open Mind

 

The COVID-19 pandemic is happening in real-time. Its constantly changing. Its fluid! It is essential that you remain flexible and are ready to change your protocols and ways of doing things as soon as new information, guidance, regulations, and rules are established.

Make long term plans but make sure that those long-term plans are easily changeable. Consider all the outcomes and possibilities of the long-term plans. If you can, it’s a good time to sock away some reserve cash and make smart decisions.

Consider Professional Management

 

Let’s face it, being a landlord was no easy task even in 2019. Now that it’s the year 2020…Well, you get the point. Being a DIY landlord now could possibly be one of the most challenging jobs, especially if its not your only job. A good Professional Property Management company has established protocols and is keeping up to date and making the necessary changes to those protocols. They should have the legal support in place and they should be constantly adapting. Now may be a good time to consider hiring a Professional Property Management partner to help you through this unprecedented time.

 

Converting Your Maine Home Into A Rental Property

Converting Your Home Into A Rental Property

When its time to move to a new home, your first thought in the process may be to sell your current house. This is usually the normal route. However, there is a possibility that you will be unable to sell, you may not be able to get what you need out of the house or you may not be able to sell as fast as you would like.

The second option is to hold on to your house and turn it into a rental property. Owning a rental property comes with many advantages, but, like with all good things, there are things to keep in mind and to consider before converting your home into a rental. It will take a lot of hard work and some prep time, but if done correctly, it could be a very wise decision! The good news is that aside from selling your current home, you can choose to rent it out.

In this article, our team here at Pine State Property Management has put our brains together and come up with an outline on how to convert your Maine home into a rental property and the advantages of doing so!

Benefits of a Having a Rental Property

Passive Income – We use the term passive loosely. Will you have to work for it? Absolutely. Will you have to work 40+ hours/week for it? Maybe….but hopefully not. Most of the time, if done correctly, converting your home into a rental property will produce additional income.

Market Appreciation – Real estate investors invest in real estate because the value tends to appreciate over time. In the investment world, real estate investment appreciation is usually thought of as more stable, even over stock investment. Selling your property now may not be the best move if you’re looking for gain as you might not be able to sell it at the best possible price. On the flip side, if you decide to hang on to the property and convert it into a rental property, you’ll likely be able to get a higher return on it in the future.

Tax Benefits – Owning rental property brings with it some tax advantages. You can deduct the expenses from your taxes. These expenses include utilities, insurance, property taxes, repairs, maintenance, and renovations as well as the interest on the mortgage. Always talk to your accountant about tax benefits to ensure you are doing things accurately, but many people choose to own investment property for the tax benefits.

Now that we have covered the benefits, if you’re still thinking about converting your home into a rental property, read on for the next steps:

1. Does your home have a mortgage?

In most instances, it is required that you live in your home for at least 12 months if you have a mortgage on it. The reason for this is that when you buy a home as a primary residence, you get a better interest rate, you don’t have to make as big of a down payment etc. When agreeing to these benefits, you are also attesting that this is your primary residence. If you rent it out to someone else, it is no longer your primary residence and the lender can call the loan due. This means that they will tell you that any balance on the mortgage is immediately due. You’re left either paying the balance or they can foreclose. Additionally, and scarier is that it’s a federal crime called mortgage fraud.

For this reason, if you have a mortgage on your home that you wish to convert to a rental, talk to your lender to make sure you understand what you can and cannot do. Generally, if you have lived in the home for more than a year, you can convert it to a rental.

2. Do you qualify for 2 mortgages?

If you’re buying a new house, you will usually need to apply for another mortgage on the new property. Talk to your lender and ensure you can get multiple mortgages. Most lenders will also consider the rental income you will get from your home that you’re converting, if you have leases to show them.

3. HOA/COA

If your home is part of a Homeowner’s Association or a Condo Association, make sure you check with them because a lot of times they flat out down allow you to use your home as a rental. The ones that do, have rules and bylaws that you and your tenants must follow.

4. Insurance.

Your homeowner’s insurance policy is not enough to protect you and your property when you have tenants. When you convert your home in to a rental property, you will want landlord’s insurance to cover the rental property. Here is some of the things landlord’s insurance will cover that homeowner’s will not:

• Medical expenses if your tenant or tenant’s guests get hurt on the property
• Protection if the tenant or a guest damages the property
• Liability against tenant lawsuits

5. Learn Maine Landlord-Tenant Laws.

There are a lot of legal issues involved with owning rental property. It is always best to find a well-qualified attorney to guide you, however, it is also important to have an understanding of the Maine Landlord-Tenant laws as well as fair housing laws yourself so you don’t get yourself in hot water.

6. Property Inspection.

You need to ensure your rental property is safe for your tenants and their guests. For this reason, we recommend you have a professional home inspection done. It’s an expense you shouldn’t forego. Not only does it ensure the property is safe, but, if a tenant tries to file a claim saying the house isn’t habitable, a 3rd party, with no dog in the fight can go to bat for you to say otherwise.
If the inspector finds any issues, it is advisable to attend to them.

7. Make home rent ready.

The most important step in converting your home into a rental property is making sure its safe for your tenants. You should change the locks and make sure smoke and carbon monoxide detectors are installed and in compliance with code. A few final steps to make your home ready for your tenants:

  • Patch any holes in walls and paint.
  • Replace any worn out carpet.
  • Have the property professionally cleaned.
  • Replace burnt out lightbulbs.
  • Mow the grass, weed the flower beds, trim the shrubs.
  • Remove any of your belongings that are not going to be part of the rental.

8. Professional Management.

Let’s face it, managing a rental property is a lot of hard work. You will get calls and need to respond to emergencies at all hours of the day and night as well as show the vacant unit, screen tenants, collect rent and several other routine items. For this reason, you need to decide if you can handle the stress involved with being a landlord and if you have the time to commit to it. If you do, awesome! If you don’t, you should choose to hire a professional manager to help you out.

There are numerous advantages to converting your home into a rental property. It may or may not be the best option for you. After considering all the facts of your personal situation, if you decide to take that route, it’s a great journey, that, with the right prep work and dedication can be a rewarding adventure!

4 Step Guide to Tenant Screening

4 Step Guide to Tenant Screening

 

Tenant Screening…Sounds worse than nails on a chalk board! A landlord’s worst nightmare…How do I do it, what do I do? I want the BEST tenant possible. How do I run a background check? Oh my goodness. I’m just going to place the first tenant that calls me. This is too complicated!

STOP!!!! DON’T GIVE UP! Screen every tenant to ensure you are placing the best quality tenant possible!

If you’re a Maine landlord asking these same questions about tenant screening, that every other landlord and property manager are asking, look no further than our 4 step tenant screening guide! Let’s make sure you are getting the best possible tenant.

 

Step 1: Preparations and Advertising

Let’s start from the beginning. Before even placing the ad, you have to have a  plan in place to make sure the entire process runs smoothly. Don’t work too fast. Often times, trying to speed through it because you’re eager to get someone in your vacant unit and start the income does the opposite. You lose money!

Now is the time to sit down and think about what type of tenant you’re looking for. I’m not talking about profession, family status, sex, race etc. because that’s discriminatory and breaking Fair Housing Laws. I’m talking about things like:

  • Income level; do they make at least X times the monthly rent each month?
  • Ability to pay rent; is their job stable?
  • Rent payment history; have they been late on rent payments in the past?
  • Credit score; set a minimum credit score that an applicant must have to qualify

Once you establish your qualification standards, it is HIGHLY recommended you run them by a qualified attorney to ensure you are not violating Fair Housing Laws. Both the state of Maine and the federal Government have very strict laws to prevent discrimination in housing. You do not want to be caught on the end of one of those claims.

After you have been given the approval by a qualified attorney, its important that every prospective tenant is treated the same way and that your qualifications don’t change from person to person. That’s another great way to get yourself in hot water with Fair Housing.

Creating the rental listing.

 

Creating the advertisement is another part that takes some time. You don’t want to just throw out a bunch of garbage. You want to put together a polished advertisement that shows you care about your rental and that you only want to attract people who will also care about your rental.

There are two schools of thought on the ad content. Some say it should be concise and to the point. Other’s say you should spell out every detail of the property and the rental policies. Somewhere in between the two is probably the best point. Ultimately its up to you. Without a doubt, you can write every answer to every possible question someone can ask, and you will still get calls and messages asking the question, (Pine State Property Management real life example: We list in all our ads which utilities are included. We get 20 calls/messages a day asking “does this include any utilities?”) its going to happen. The benefit of listing your important policies and information in the advertisement is that if a tenant ever questions it, its one more arrow in your quiver when you must defend something. Its one more place they had access to the info and should have known it.

Next, think about how you want to get your advertisement in front of prospective tenants. There are many ways, both paid and free. These include:

Step 2: The Interview

Once your ad is up, the phone will start ringing, the emails will start coming in and its time to take the first steps in determining if someone is a qualified prospective tenant which can turn into a great actual tenant. Before scheduling showings, proceed as follows:

 

1. Carry out a short over-the-phone interview.

When a potential tenant calls to inquire about a vacant unit, you should have a few questions you ask before scheduling a viewing. This is your “pre-qualification” process. This is not a full application but why waste your time and theirs with a showing if they don’t even meet the basic criteria you’re looking for. Like with anything in the housing world, this pre-qualification should be a standard set of questions you ask EVERY prospective tenant to avoid any fair housing or discrimination claims.

So, what should you ask? Well, here are a few good questions to consider:

  • Where are you currently living? Are you renting, do you own, live with parents etc?
  • What is the reason you are looking for a new place?
  • How many people do you propose will be occupying the unit?
  • Do you have any pets?
  • Have you ever been evicted?
  • We check credit and criminal backgrounds on every applicant, are you willing to agree to us running these checks on you?
  • The total monthly cost you would have to pay for this unit is ____ (including/not including utilities), are you aware of this and is that acceptable to you?
  • We require all adults over 18 years of age that will be residing in the unit to apply, be approved and sign the Lease Agreement. Do you understand that?
  • What questions do you have for me?

This pre-qualification is not an end all be all but it does help weed out unqualified individuals. You would be surprised how many times just letting someone know you run background and credit checks shaves the list down.

The downside of the phone interview is that people can lie, you have no way to prove what they are saying is truthful and you are not face to face with them so you cannot see how they are acting while answering the questions. But it is a great starting point.

 

2. Continue your screening during the showing.

So, we have posted our ad, taken calls, answered questions, pre screened prospective tenants and now we have scheduled showings with the ones who are still here. Pat yourself on the back, the easy part is over!

While at the showing, it’s a great opportunity to size up the prospective. Once you’ve done this a few times, you can usually tell if someone will be a good tenant during the showing. One thing I’ve learned during my many years of doing this is that if your gut tells you something doesn’t feel right or if you’re on the fence about whether someone is qualified, trust it. I’m not saying discriminate…See above. What I am saying is that usually if it feels like someone is being mis truthful or withholding info, it’s because they are.

During the showing you should continue your interview by asking more questions:

  • What do you do work?
  • If approved, when would you like to move in?
  • How long have you lived where you currently are?
  • Ask again why they are moving. Sometimes, if they lied on the phone and are moving because of say, an eviction, they may have forgotten the reason they told you before. That’s why its handy to write down their answers to compare later.
  • As I said before, we run background and credit checks on all applicants. Do you know how your credit is? Do you have any criminal history? If so, what?
  • You’re aware that we require a _____ security deposit and separate application and app fee for each applicant?
  • Do you have any questions about the rental, my process or the policies?

After the viewing, offer them the rental application or let them know how to access it if its online. Let them know again that any person over 18 years of age who will be residing in the unit needs to complete a separate app, pay the fees, be approved and sign the lease agreement.

3. Provide a tenancy application form.

The best way to collect the most important information about your prospects is through a rental application form.

In the form, you can ask for details such as:

  • Employment Information – This may include dates, salary, position, and history.
  • Residential History – Also, don’t forget to ask for the landlords’ contact information.
  • General Details – For example, criminal records, past financial issues like bankruptcy, conflicts with former landlords and the reason behind them, and pet information.
  • Lifestyle Description – For instance, do they have pets?

Step 3: Background Check and Tenants’ References

The credit check and background check is the most important part and often the hardest but it MUST BE DONE! There are a lot of services out there that claim to provide this information, but be careful, research and review a company before giving them your money. Once you select a company that you feel confident will provide accurate results, it’s time to thoroughly screen!

The platform won’t do all the work for you but a good one should give you the basics; A credit profile, criminal history and a check of the eviction database.

The rest of the work is up to you. You will need to contact the tenant’s employer regarding their character. Employers won’t be able to provide you a ton of info but it’s a step you don’t want to miss.

If they are currently renting, you will want to contact the current landlord and previous landlords to find out if they paid their rent on time, they respected the rental and were good tenants. The most important question to ask is “would you rent to them again?” If they answer “no”, move on!

After you have done all the above, its time to select the tenant. Often you will have a few that have passed all the steps. Its up to you, as the landlord to decide which one you enter into a lease with!

Step 4: Selection and lease signing

 

You’ve completed the process….Almost. Once you’ve selected the one person out of the pool, that leaves the lease signing.

As is the common theme with this article, Fair Housing Laws apply. Make sure you’ve consulted with a qualified legal professional regarding any notices you have to send any accepted and rejected applicants.

As a recap, you cannot discriminate against tenants by refusing to rent to them due to their nationality, handicap, familial status, sexual orientation, gender, religion, age, political ideology, or race.

Not only is doing so wrong and unethical but its illegal and you can end up with a hefty fine on your hands.

Conclusion

With the right process in place and the proper tools, the search for a prospective tenant can be completed in 4 relatively easy steps. The more you do it, the better you will get at it and the easier it will become.