Pros and Cons of Including Utilities in Rent

Pros and Cons of Including Utilities in Rent

One thing that property investors must analyze when considering a rental property is the cost of utilities. As a landlord in Snohomish County, Washington, it goes without saying that your goal is to maximize the potential profit and income you make from your rental property.

Oftentimes, maximizing your profits usually means transferring the utility costs to residents.

Landlords have the option of including the utility costs in the rent at a fixed price.

That said, there are certain pros and cons of having utilities included in the rent. In this article, we’ll help you know what you’re getting yourself into prior to making the final decision.

Pros of Including Utilities in Rent

Pro #1: Utility costs are tax deductible.

If you decide to include utilities in the rent, you’ll be charging a higher rent. Which ultimately means you’ll have higher taxes… Right?

Well it depends on how you look at it.

If you are properly charging your tenants, then you’ll be making more profit, and therefore, paying higher taxes.  

However, the costs of your rental’s utilities qualify as a tax-deductible. Utilities are a great expense for landlords and qualify as a genuine business cost associated with property ownership and management.

If you need help filing your tax deductibles, hire a professional accountant who’s well-versed in the rental property business.

Pro #2: Including utilities can set you apart from the competition

Many potential renters love the idea of having their utilities added in their rent.

As a landlord, you will no longer have to get into what is included and what’s not included in your rental listing.  

As a renter, having all utilities included in the apartment or house’s rent provides peace of a mind. Utility bills usually vary month to month, which makes budgeting difficult. More so for renters in the lower-income bracket. By having a fixed payment that includes both the rent and the utilities renters will not have to pay any additional bills.  

Put another way, it may help your Snohomish County, Washington property stand out from the competition.

rental-business-competition

Pro #3: You can set a monthly utilities cap.  

Say, for example, the normal utility bill in January for your unit is $100, but the tenant’s bill comes in at $150. Who is responsible for the extra $50?

Well, this is where you lease, or rental agreement terms become important.

If you haven’t stated anything about the monthly utility bill cap, then you’ll have no other option than to pay the extra cost.

However, if your agreement specifies what the utility bill cap will be, your tenant may pay more attention to their utility usage. In other words, it’ll prevent the “all-you-can-eat” mentality from taking hold.

As a side not, make sure you adjust your cap depending on the season. Obviously, the costs of utilities go high during the hot and cold seasons.

Pro #4: You can charge more.

This is the most obvious reason of including utilities in rent.

By including utilities in the rent, you can charge more than the actual rent price. This is precisely the reason why many landlords entertain this idea in the first place.

Including utilities in rent essentially means taking on an extra liability and responsibility. Thus, it only makes sense to get something back as compensation.

To cover your bases, do some research. Try and figure out what landlords in your neighborhood charge for utilities for comparable units. If you are unable to find any, then consider taking your search online.

rental-fee-money

Cons of Including Utilities in Rent

Gee whiz! These are a lot of reasons why you should include utilities in rent. Makes sense why many landlords in Snohomish County, WA consider it, right?

That said, there are some drawbacks to doing it. They are as follows:

Con #1: You may have a hard time filling a vacancy.

This is usually the case in markets that are exceptionally price-sensitive. Tenants looking may be willing to pay a maximum amount, and not anything more.

Remember, nowadays, tenants search for apartments online and usually set the search filter to a specific price range.  

This means that a good number of potential renters may never get to see your property listing. Or, if they actually do get to see it, they may not understand that the rental price also includes utilities.

Con #2: It’s another thing to add to your list of management responsibilities

Being a landlord isn’t easy. There are a lot of responsibilities involved. So, you may not find managing utility bills that worthwhile for you.

Forgetting to pay the utility bill on time will mean incurring late fees. In such cases, the costs will come right out of your cash flow.

property-management-responsibilities

Con #3: A rise in utility costs may mean fewer profits

Utility costs can sometimes go up. Say, for example, the gas and electricity rates rise by $50 per month. Guess who is going to be liable for that extra cost?

That’s right, it’s you!

Granted, you have the option of raising the rental price every time the lease is up for renewal. But that could be a year away!

Con #4: You become liable for your tenant’s utility bills.

If your Snohomish County tenant is normally liable for their own utility bills, the utility company will go after them should they fail to pay.

However, if you decide to take on the responsibility of handling the tenant’s utility bills, it is now your problem. You’ll need to keep paying the bills even if your tenant defaults on the rent.

You can’t just cut off their gas or electricity supply to compel them to pay up. The only option you’ll have is to file for their eviction in court, as you continue paying their bills.

frustration-woman-bitting-pencil

There you have it. 4 pros and 4 cons of including utilities in rent. Is there a straightforward “right” answer here? Of course not. As such, you’ll need to evaluate both options to see which one can work out for you.

Pros & Cons of Self-Managing Your Rental Property

Pros & Cons of Self-Managing Your Rental Property

When buying your first rental property, you may be tempted to assume that your investment journey is going to be an easy one.

 After all, how hard can rent collection be?

If that’s so, you may be in for a rude shock.

Owning a rental property is very different from managing your own rental property.

While ownership may be easy – when you have a steady income- managing a rental property is more than just collecting rent.

Generally, you may find yourself asking “Should I hire a property manager or self-manage my rentals?”

There’s no straight answer to this. However, this post covers a few pros and cons of self-management and how it compares to professional property management.

The Pros of Self-Managing Your Rental Property

1.     You’ll have 100% control over your investment.

Self-managing a rental property means that you are responsible for everything.

Whether it’s marketing, tenant screening, tenant management, maintenance, and repairs, you’ll get to handle it all.

self-manage-rental-property

Therefore, you’ll be able to make decisions that you feel are the best for your business. Decisions that will get you even closer to achieving your investment goal and objectives.

Also, there won’t be a middleman or third-party person between you and your rental revenue.

2.   You don’t need to pay property management fees.

Seven to fifteen percent of your rental income each month is payed to your property management company.

So, if you manage your own property, you’ll be able to save on property management fees.

For example, let’s say your local property manager charges 10% of the monthly income. That means that by the end of the year they’ll have charged you more than 1 month’s rent, and that’s 10% X 12 months = 120%.

3.   You’ll get the chance to learn and gain experience in the rental property industry.

The more you learn about your property investment, the easier it will be for you to grow it.

Now, despite some setbacks in the beginning, self-management can help you to become sharper and smarter in the rental industry. Hence, making it easy for you to expand your investment over time.

4.     You’ll have more reasons to manage your property well.

When it’s your money on the line, you’ll be highly motivated to make things work and to grow your investment. If you, by chance, hire a bad property manager, your rental won’t be given the property amount of care and attention.

After all, if it fails, they won’t be the biggest losers.

property-maintenance-table

Now if you want something done perfectly, do it yourself, right?

Self-managing your rental offers you the chance to grow your investment as per your vision. Whether it succeeds or fails will solely depend on you.

5.   Your rental property will be in good hands.

Unlike self-managing, hiring a property manager is never a guarantee that your property will be well taken care of.

Your property managers can fail to take good care of your rental.

That being said, you should also consider the downsides to managing your own rental.

The Cons of Self-Managing Your Rental Property

1.     This job is often very demanding.

Unless you are a retiree or unemployed with lots of time to spare, you may find it difficult to properly manage your investment property.

There are so many tasks that will require your attention.

From maintenance requests to dealing with bad tenants, it can be overwhelming.

landlord-vs-property-manager

And if that’s not bad enough, you’ll have to respond promptly to your tenant’s complaint and maintenance issues. Even when they call you at three in the morning because of a plumbing issue.

Also, when dealing with a large number of tenants, there’s a high chance that you’ll forget to do some things. In other words, you’ll do a poor job of managing your rentals.

2.     You may not screen tenants properly.

Unlike hiring a property manager, self-managing means that you’ll have to screen all your prospective tenants.

Unfortunately, without proper experience, knowledge, and resources, you may end up with bad tenants.

A bad tenant is someone who:

  • Won’t pay their rent on time
  • Won’t take care of your property
  • Is a nuisance to other renters
  • Won’t be easy to reason with when there’s a problem on the property

On the other hand, property managers have the skills, information, and manpower it takes to process the pile of applicants fast and efficiently. That means they have a trained eye in spotting good potential renters out of the many who apply.

More importantly, they have methods of performing thorough background checks. This includes credit checks, employment history, public records, eviction records, criminal history and more.

3.   You’ll have to face rent collection and eviction issues on your own.

DIY rental management means that you’ll be responsible for collecting rent. It can also mean playing “cat and mouse” with some of your renters every month.

This can be frustrating, tiresome, and time-consuming.

Moreover, you’ll have to deal with lengthy and expensive legal proceedings if you must evict a bad tenant. Not to mention the marketing expenses you’ll incur to get new tenants.

That’s why hiring a property manager may be ideal. Since their job is to take over all property management responsibilities, they will :

  • Find good tenants
  • Collect rent on time
  • Mitigate eviction expenses

4.     Some of your mistakes can be costly.

It’s true that self-managing presents you with an opportunity to learn and gain experience.

However, it also means that you’ll be experimenting with your rental property.

Too many mistakes can lead to massive loses or even closure. And that’s not something you want, is it?

home-rental-management-companies

Therefore, instead of self-managing your first rental property, you should hire a professional manager.

That way you’ll learn a few things from them up until you’re confident enough to do it yourself. It’s cheaper and safer that way and you’ll get to enjoy the benefits of owning a rental property.

5.   You may end up spending more than you should to run and maintain your rental property.

To get better and higher returns from your investment, you have to make sure you mitigate your expenses. That means exploring your tax benefits, getting discounts from vendors and service providers, avoiding legal disputes, minimizing maintenance costs, and so on.

That may be hard for you, especially if it’s your first time.

Reputable property managers know what to do and how to minimize operational costs while doing it.

Plus, some of them often have partnerships with local vendors. Therefore, they have a higher chance of getting discounts.

At the end of the day, your decision will be highly dependent on the costs you’ll earn; to self-manage or hire a professional management company.

However, aside from the costs and risks of hiring a bad company, property managers are your best bet. They’ll not only give you more time and freedom but also help you to learn a thing or two about rental management.

4 Tax Benefits of Investing in Real Estate

4 Tax Benefits of Investing in Real Estate

Taking full advantage of tax breaks is one of the best ways to maximize your rental income.

What most landlords don’t know is that there are quite a number of tax benefits that come with investing in real estate.

Unfortunately, filing taxes for rental properties is not optional. And sometimes it can be very expensive.

But, that’s only if you don’t know how to use tax benefits to your advantage. Real estate tax breaks can actually save you thousands of dollars every year.

So, if you are looking for ways to maximize your rental income by minimizing your tax expenses, you are in the right place.

This post explains how four of the best tax benefits can help your bottom line.

Four of the Best Tax Benefits for Real Estate Investors

Of course there are more than four tax breaks available for real estate investors. That’s why it’s wise to familiarize yourself with each one, keeping in mind where your investment is located, and its surrounding legislation.

It could mean the difference between paying or saving thousands of dollars in tax. Here are four of the best tax breaks to start you off on your money saving journey:

1.     Depreciation Benefits

You read that right – properties do depreciate with time. Now, it may seem a bit confusing given that property values often go up with every year that passes.

So, it’s only natural to ask: How does depreciation work?

Generally, investment properties are considered assets by the IRS. That means that in the eyes of the government, your investment property loses its value over time.

And that’s why they often allow property owners to deduct a depreciation expense from their total rental income.

Amazing, right? Well, it gets better.

According to the IRS, a rental property’s useful or productive lifetime is 27.5 years and 39 years for commercial properties.

Basically, this means that you can deduct a depreciation expense from your annual rental income for 27.5 years.

The expense is meant to cover your property’s “exhaustion” or “wear and tear” over time.

And while property exhaustion is rarely the case – thanks to preventative measures and proper maintenance – nothing much changes.

So, how can you calculate your property’s depreciation expense? It’s simple.

Use this formula:

Annual Depreciation Expense = Total Value of Property/Number of Productive Years (in this case, 27.5)

Therefore, if you own a $200,000 rental property, your depreciation expense will be:

Annual Depreciation Expense = $200,000 / 27.5 = $7,273

Basically, that means that the IRS will allow you to deduct $7,273 from your gross annual rental income each year. It’s a massive save, isn’t it?

To calculate depreciation, you have to factor in three things:

  • Your property’s value
  • A depreciation calculation method
  • Your property’s recovery period

In most cases, the Modified Accelerated Cost Recovery System (MACRS) depreciation method is often applied. It helps you to calculate home much taxes you’ll owe after making a depreciation deduction.

For example:

If your property is worth $200,000 and yields around $30,000 a year in rent. Here’s how to calculate your taxes.

The tax amount you owe without a depreciation deduction = $30,000 * 25% (federal income tax) = $7,500

On the other hand…

The tax amount you owe with a depreciation deduction = ($30,000 – $7,273) * 25% (federal income tax) = $5,682

Therefore, a depreciation deduction on a $200,000 property cuts down your tax expenses by $1,818 ($7,500 – $5,682) every year.

Additionally, the more properties you own, the bigger the tax saving.

2.     Other Tax Deductions

Apart from depreciation deductions, there are other expenses you can write-off from your gross rental income.

What are these expenses?

Generally, all expenses incurred to manage, preserve, and maintain a property can be written off from the total taxable income.

These expenses include:

The main reason why these expenses are deductibles is that they do not add value to the property.

Instead, they are incurred to preserve and maintain the property.

3.     The 1031 Exchange

If you think you’ve seen the best of tax benefits, then you are wrong.

The 1031 Exchange is just as awesome as the ones above. So, what is it?

The 1031 Exchange gets its name from Section 1031 of the Internal Revenue Code. This tax benefit allows property investors to swap properties without having to pay their normal sales tax rates.

Basically, during a swap, you can pay little or no tax at all to get the new rental property.

Tthis tax break allows you to transfer your capital gains from the old to the new property.

Think of it as a sale; only this time you get paid in form of another property instead of cash.

Unfortunately, as good as it may sound, there are a few conditions that must be met; including:

  • The new property must be used for productive business purposes.
  • Both properties must be considered “like kind.”
  • The new property should be equal or great in value to the old property.

4.     Capital Gains Tax Benefits

Capital gains are the profits you make from selling a piece of property.

Now, there are two main types of capital gains. They are short-term and long-term gains.

The difference between the two is that only one of them offers you tax benefits.

So, which one is it?

You’ve probably been told to hold your property for more than a year before putting it back on the market. Short-term gains come from the sale of a property owned for less than a year.

This is bad because it comes with no tax benefits. So, you’ll be expected to pay the taxes at the usual rates.

However, long-term gains are beneficial in that you get to pay taxes at lower rates. But that’s only if you own the property for more than a year.

Also, your tax obligations reduce as time goes by.

The longer you own the property, the lower your tax burden will be when you decide to sell.

In summary, taking advantage of all available tax breaks can be a great way to cut down your tax burden.

The benefits above will give you a great start towards saving thousands of dollars in taxes each year.

What are Your Mortgage Options When Buying an Investment Property?

What are Your Mortgage Options When Buying an Investment Property?

Are you planning on buying investment property in Seattle, Washington? If so, you are probably wondering where you can find a good mortgage to finance you rental property.

Well, there are a number of investment property mortgage options available. Each of them comes with their own set of features, requirements, pros and cons. That’s why it’s wise to ensure that you know everything about these different mortgages so you can find the best one for you.

Taking up a mortgage for a rental property is ideal for people searching for a way to lighten their financial burden. It’s also a way to minimize risks.

So, what are your investment mortgage options? Read on to find out.

 

Common Mortgage Options for Rental Property Buyers

Generally, there are many mortgage options for you to choose from. Knowing how each of them works is the best way for you to find a good and cost-effective mortgage plan.

Below is a list of popular rental property mortgages that most property investors in Seattle choose.

 

1.     Federal Housing Administration (FHA) Mortgage

Arguably, it’s one of the best and most convenient types of mortgages to finance your investment property.

Unlike most mortgages, FHA loans come with little requirements, low-interest rates, and easier terms.

In fact, the only major requirement worth mentioning is that this real estate investment loan only applies to owner-occupied rentals. This means that for an applicant to get such a loan, they have to show interest in residing in the property.

Furthermore, the FHA doesn’t issue the mortgages directly. Instead, the agency insures loans against losses given to applicants by private entities. Therefore, lenders get more incentives and feel safe issuing high-risk applicants with mortgages.

And that’s not all. FHA mortgages allow for applicants to provide extremely low down-payments of up to 3.5%. Awesome, right?

Unfortunately, due to the high number of applicants for this kind of real estate loan, processing and approval may be a bit slow. Therefore, it’s not ideal for time-sensitive purchases.

 

2.     Investment Property Mortgages

Another way to finance your purchase is by applying for an investment property mortgage.

Unfortunately, getting these loans is almost never easy. And to make matters worse, the costs can be pretty steep.

These real estate investment loans are often ideal for applicants with impressive credit histories and sizeable down payments. If you are wondering why this is, well, it’s because investment property mortgages are tailored to accommodate investors with:

  • High credit ratings
  • Decent debt-to-income ratios
  • A sizeable down payment (at least +20% of the buying price)
  • And full documentation of their pay stubs, W2s, and tax returns

Also, applicants must have enough cash or assets to cover the first six months of the mortgage. Naturally, very few people meet these investment property loan requirements.

If you’re lucky enough to meet these, you have to make sure you have less than four current mortgages. That’s because most banks and lenders don’t offer investment property loans to applicants with more than four mortgages.

 

3.     Hard Money Loans

If you are in need of quick cash to buy a Seattle investment property, then a hard money loan is what you need.

These mortgages are often great because of a couple perks including:

  • Fast approval.

On average, it takes less than a day to get a hard money loan processed and approved. This makes it ideal for investors handling time-sensitive or urgent purchases.

  • Few requirements.

Unlike investment property mortgages, hard money loans don’t have a lot of steep requirements. Basically, anyone can apply regardless of their credit status or the number of mortgages they have.

Sounds great, right? Unfortunately, these loans also have their fair share of disadvantages. For example:

  • This investment property loan comes with high-interest rates. If you decide to go with hard money loans, you should prepare to pay higher interests.
  • Also, they are short-term. This means that you’ll be expected to repay the mortgage within a short period of time. In most cases, it’s often two to three years.

 

4.     Conventional Mortgages

Now, if you are looking for a better alternative to investment property and hard money mortgages, a conventional mortgage will do.

Read on to find why.

Generally, conventional loans are less costly and are tailored to conform to guidelines set by reputable mortgage lenders like Freddie Mac and Fannie Mae.

The main difference between conventional and investment property loans is that the former accepts high-risk applications.

But the higher the risks, the higher the interest rates and down payment for the investment property, among other fees. Therefore, applicants with unfavorable financial profiles may end up paying more for such mortgages.

 

5.     Veterans Authority or VA Mortgages              

For veterans and those currently serving, getting financial backing is easy thanks to VA Mortgages.

A VA mortgage is a housing loan offered to people who’ve been – or are currently – serving in America’s armed forces.

The biggest perk of VA mortgages is that this investment property loan comes with no down payment requirements. Plus, they have very generous and lenient rates and terms.

But it’s worth noting that there are a few conditions that applicants must meet in order to get these mortgages. For example:

  • The applicant must be a veteran or currently serving in the army.
  • They should reside in one of the rental units for not less than one year.
  • Also, the property has to be ready for occupancy and approved by legitimate VA home appraisers.

Obviously, there are other means that investors use to get investment property financing: These are just a few of the most common ones.

That being said, what can you do to make sure you are on the safe side as far as investment property mortgaging is concerned?

 

A Few Useful Mortgage Tips for Rental Property Buyers

  • Research is key. It helps you to compare and contrast all available options then make a decision based on your facts.
  • Consider making a large down payment. It can help reduce your interest rates.
  • Make sure you read and understand the fine print. It will save you a lot of trouble and inconvenience in the future.
  • Also, ensure you have at least six months’ worth of assets or cash. It gives lenders more incentive to loan you money.
  • Stick to your budget. This ensures that your investment plan goes smoothly and as planned.

 

There you have it. A quick run-down of what your mortgage options are when buying an investment property in Seattle, Washington. All you have to do is to figure out which one of the options above comes closest to your preferences, budget, and plans.

8 Things to Know About the Fair Housing Act

8 Things to Know About the Fair Housing Act

Thanks to the Fair Housing Act, every American has the right to equal treatment when it comes to housing. Unfortunately, there are still some people in Seattle, WA who know very little about this law.

That’s why it’s not rare to find property landlords and sellers fighting lawsuits due to discrimination.

So, if you are a landlord looking for more information about the Fair Housing Act, here are answers to eight of the most common questions.

 

1.    What’s the Fair Housing Act?

The Fair Housing Act is a law that deals with discrimination in the housing sector.

It was established to deter landlords and property sellers from discriminating against members of a particular class in society.

Basically, it ensures that every American, regardless of class, is treated fairly and equally in any housing-related activity including:

  • Selling a house,
  • Renting and;
  • getting a mortgage loan

2.    How long has the Fair Housing Act been in play?

Officially, the Fair Housing law was enacted in 1968. But, in truth, the fight for fair housing begun in the mid-1800s.

Sadly, back then housing discrimination was very rampant. That’s why it contributed to a series of actions, including:

  • The Civil Rights movement (1960s)
  • Rumford Fair Housing Act (1963)
  • The Civil Rights Act (1964)
  • And finally, leading up to the Fair Housing Act (1968) which was established a week after Martin Luther King Jr.’s assassination.

Evidently, this Act is one of America’s most significant milestones. And the fact that it affects so many lives makes it a necessity.

3.    What are the Fair Housing Act’s primary goals?

So, what exactly does the Fair Housing Act do? Or better yet, which examples of housing discrimination does this Act protect people from?

Well, as stated earlier, the Federal Fair Housing Act touches on three main aspects of housing including the selling, renting, and mortgaging of a house.

Here are some examples of discrimination that the FHA shields tenants and property buyers against:

  • Refusing to rent, sell, or negotiate for housing
  • Lying about the availability of a housing unit or making
  • Treating different people with different terms and conditions when renting or selling a home
  • Blockbusting (convincing property owners to sell their homes under false pretense)
  • Offering different housing amenities and accommodations for different renters
  • Setting disparate terms and conditions on a mortgage loan
  • Refusing to purchase or make a loan
  • Practicing discriminatory practices during property appraising
  • Refusing to make information about a mortgage loan available
  • Setting divergent requirements for purchasing a house loan
  • Using discriminatory statements or being bias against a protected class in your property adverts
  • Threatening or interfering with someone’s Fair Housing rights

federal-fair-housing-regulations

 

4.    What classes of people are protected under the Fair Housing Act?

The FHA currently protects tenants categorized by seven classes.

The list of protected classes includes:

  • Race
  • Color
  • Religion
  • National Origin
  • Sex (1974)
  • Disability (1988)
  • Familial Status (1988) – Pregnant women and having children under 18 in a home.

In addition, the year 2017 saw the addition of two more classes to the list. Despite the fact that these classes are not yet explicit in the Fair Housing Act, they are also considered as protected classes. These new classes are:

  • Sexual Orientation
  • Gender Identity

5.    Who enforces the Fair Housing Law?

You may be wondering; who enforces this law?

Well, for many years, enforcement has been a major concern among housing advocates. This is mainly because of inconsistencies across local jurisdictions. Although, anyone whose rights have been violated can file a lawsuit in a federal district court or file a claim with HUD.

Officially, the U.S. Department of Housing and Urban Development or HUD is fully responsible for the Fair Housing Act.

But, how do they enforce this law?

HUD employs two methods of enforcement:

  • Investigating discrimination claims – Obviously, anyone who feels like their Fair Housing right has been infringed can file a discrimination claim. Thereafter, HUD dispatches a team to investigate the claim. If they find any merit to the case, they’ll decide on the best course of action.
  • Fair Housing Testers – HUD uses this technique to check whether sellers or landlords are compliant with the Fair Housing Act. They do so by hiring ordinary people to pose as tenants and home buyers. Therefore, as a landlord or seller, you have to be extra cautious with the things you say on the phone, face-to-face, or on an advertisement to your prospective tenants or home buyers.

 

6.    Are there any exemptions?

Does the Fair Housing Act apply to everyone in Seattle, WA?

No. There are a few exemptions worth noting including:

  • A members-only private club or organization,
  • Single-family homes sold or rented without using a broker, and;
  • an owner-occupied home with less than 4 rentable units.

communication-fair-housing-act

 

7.    What are the penalties for violating the Fair Housing Act?

In case you innocently (or not so innocently) violate the Fair Housing Law, there are a few penalties you may face.

Moreover, the penalties vary depending on the nature of the violation.

For example:

  • A simple discrimination charge attracts a fine or imprisonment for at most a year or both.
  • In case there are bodily injuries, the use/attempted use/threatened use of dangerous weapons/explosives/fire, there shall be a fine to be paid or imprisonment for at most ten years or both.
  • Lastly, if the discrimination results in a death/attempt to kill, kidnapping/attempted kidnapping, aggravated sexual abuse/attempted aggravated sexual abuse, the penalty may be a fine or imprisonment for any number of years (sometimes life imprisonment), or both.

8.    Are there ways to avoid an accusation of discrimination?

There are a few things you can do to steer clear of Fair Housing charges. For example:

  • Treat every prospective tenant as a HUD agent trying to bust you for discrimination. Therefore, choose your words carefully when talking to prospects or creating an advertisement.
  • Despite the fact that you are expected to comply with the Fair Housing Law, there are a few qualities you can use to deny the sale or renting of your property. These things include criminal records, poor credit, inability to pay the rent, or even unhealthy lifestyles like smoking.
  • Maintain consistency at all times. Vetting your prospects using the same process minimizes the chances of you being accused of discrimination. Also, treat everyone with respect, dignity, and kindness.

 

In summary, these are eight of the most common questions people ask about the Fair Housing Act. If you are a landlord or a property investor in Seattle, WA, the information provided above can greatly help you to avoid legal issues with your prospects due to discrimination.

 

How to Rent Your Former Home

How to Rent Your Former Home

Turning your home into an investment property can be a fantastic way to start making extra income. But, the transformation should be treated as a financial decision rather than an emotional one.

Emotional decisions tend to be reactive. They are fast, reflexive, and don’t always have our long-term well-being in mind. Sure, it’s understandable that people develop strong connections with their houses. It is their home after all.

The dining room has been the setting for many a great dinner parties. You’ve spent many hours on the backyard patio. Your kids grew up in the house; you can still see the pencil marks made on the door frame marking their growth. Perhaps, you may even have grew up in the house, and it’s been in the family for over half a century.

However, when considering turning your former home into an investment property, your decisions should be based on the financial benefits. By hanging onto a “love affair” with your home, you are subconsciously sabotaging your chances for success.

That’s why in this article, we share 5 tips on how to transition from a home you loved to one that is strictly for business. It is easy to rent our a house, just read on.

 

Tip #1: Neutralize the home.

Neutralizing your home has two main benefits. One, it can help make the home ‘show ready’. And two, it will help depersonalize you home. It’ll seem more like a house and less like a home, allowing your guests to feel more comfortable.

That bright blue child’s room or red dining room might have pleased you, but your guest might not feel the same way. These personal touches are what people on HGTV refer to as “putting your stamp on something.”

So, essentially, your goal should be to get rid of your “stamp”. Here are some tips on how depersonalize your rental property:

  • Paint in neutral colors. Neutral colors give off an open-minded and simplistic attitude. They create few distractions. They appeal to a greater mass of people and go with all furniture styles and colors.
  • Clean your rental property. A clean home conveys a pride of ownership and assumed maintenance.
  • Get rid of all your furnishings and personal belongings. Pack away “theme based” or ornate pieces of accessories, artwork, and furniture and replace them with nice and stylish objects.
  • Repair all the quirky home decor you have grown used to: dated light fixtures, stuck drawers, leaky faucets).

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Tip #2: Get additional landlord insurance.

Your homeowner’s insurance won’t be enough now that you are transforming your former home into an investment property. Anytime you have someone staying in your property, you assume some degree of responsibility to their safety.

What if there is a gas leak that causes an explosion? What if a tree falls on the home injuring your tenant? Or, what if a natural disaster occurs, destroying the home rendering it uninhabitable?

Landlord liability coverage may help protect you from financial loss arising due to property damage from severe weather, break-in, fire, and more.

In addition, you should also consider making a renter’s insurance mandatory for tenants. It’ll benefit you just as much as your tenant.

 

Tip #3: Determine how much rent to charge.

You’ll want to set a rent price that attracts tenants and will lead to profits. There are a number of things you’ll need to think about when you’re trying to determine how much rent to charge.

You could start by considering what landlords are charging for similar rentals in your area. This is what real estate agents refer to as comparative market analysis. Websites like Craigslist or Trulia can also prove useful in this regard.

Another way to determine how much rent to charge is by figuring out your former home’s value. You could use a website like Zillow to help you in this regard. However, for a more accurate assessment, a home appraiser is the best option.

The rent amount should be a percentage of the value of your home. Normally, rents fall between 0.8 percent and 1.1 percent of the value of the home. For a house valued at $250,000, for example, a landlord could ask a rent of between $2000 and $2,750 every month.

Also, bear in mind that some states have rental laws that limit how much landlords can ask for rent and security deposits. Places like Washington D.C, California, Maryland and New York, for instance, have rent control laws in place.

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Tip #4: Advertise your house for rent.

Once you are emotionally detached and the home is show-ready, advertise it. Gone are the days of simply placing a sign outside a home when you are trying to rent a home. Today, the internet is a critical part of our daily lives and you need to use this to your advantage.

Prospective tenants are looking for dynamic content that gives them more than just a number of baths and bedrooms. They are looking for interactive media, real-time mapping, 3D walk-throughs, social integration, rental reviews, and videos.

Rental listing sites provide the best way to maximize exposure for your rental property. Remember, the goal is to get your listing in front of as many potential renters as possible.

Examples of rental listing sites include Realtor, Rentalhouses, Hotpads.com, Zillow, and Craigslist.

 

Tip #5: Prepare questions to ask prospective tenants.

Once you begin getting some interest from prospective renters, it’s time set up the showing. Prepare a set of questions to ask them. These will help you screen for good tenants from the bad, immediately. The following are some good examples of questions to ask your prospective tenants.

  • Why are you moving? Look for legitimate reasons for moving, such as wanting more room and space or changing jobs.
  • How many people will be living with you? Generally, the fewer the better. It means less wear and tear. As a guide, look for a maximum of two people per bedroom.
  • What is your monthly income? Look for a tenant making at least two and a half times their monthly rent. The last thing you want is having to evict a tenant for nonpayment of rent.
  • Will you agree to a credit and background check? If they hesitate to answer, it’s likely they have something to hide or don’t want to commit. Continue looking.

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Becoming a landlord is a big step. Your world, like becoming a parent, is about to change; decision making, obligation and duty of maintenance are all matters to consider. Get it right and it can be fulfilling and financially rewarding. Get it wrong and it can become frustrating and stressful.