Planning for retirement is tough. Figuring out how much money you'll need for health care is even tougher. To find out why, click here to read this article from CNN Money.
Thursday, December 31, 2015
Wednesday, December 30, 2015
Tuesday, December 29, 2015
You’ve made the decision to become a landlord; you found the perfect home to rent out. Now you’re on a hectic deadline because every day it’s empty means money out of your pocket. So you can’t dawdle.
If the property needs work, don’t wait until it’s completely done before looking for a tenant. Start showing it when you’re putting on the finishing touches, such as painting the interior or replacing the carpet. Sure, it’s nice to show a finished product. But time is not your friend.
The faster you get it rented, the faster the cash flow starts coming in. It doesn’t hurt to have lookers catch you with your hands dirty; lets them know you take pride in the property and work for a living.
Your goal is to have a qualified tenant move in the same day you do the final vacuuming.
I’ve had the best experience putting a small ad in the local newspaper. Make your ad very clear to reduce the number of frivolous calls.
Something like this:
Xxx town, 2/2, $xxx per month, 975 sq. ft., immediately available, no pets, FLS, 12-mo. lease, phone number
Word-of-mouth through real estate agents you know, people who live on the same street as your property, or your social media connections are always good.
Social media gives you more flexibility than print ads. For example, with online ads you can include color photos of a freshly mowed lawn, a well-lit kitchen, or the sparkling community pool, which can make a huge difference in the number of responses you get. While you’re writing your online ad, punch it up with more details such as walk-in closets, covered parking, or a large back yard.
Be sure to include the city and state where your rental is located.
Craigslist is another avenue to try. Zillow and Trulia also let you post a rental for free.
And when you schedule appointments with prospective tenants to see the property, make them all within a specific time frame, say 2-4 in the afternoon. That will eliminate wasting your time on “no shows,” and it will create a sense of urgency on those who show up to make a decision since they’ll see that the house is in high demand.
Wednesday, December 23, 2015
Last week the Federal Reserve increased the federal funds rate and the discount rate by a quarter of a percentage point. Soon you should see the yields on your savings accounts, money market accounts, and money market funds go up, too.
And if you’ve been thinking about buying a long-term care insurance policy, or already own one, you might also benefit.
According to Jesse Slome, executive director of the American Association for Long Term Care Insurance (AALTCI), "Higher interest rates will enable insurers to avoid increasing premium rates with new policy offerings." According to AALTCI data, a one-percent increase in (long-term) interest rates can translate into a 10-to-15 percent decline in policy premiums (costs).
"Companies currently offering LTC insurance policies will earn more money on the reserves they set aside to pay future claims," Slome explains. "Financial strength is important for existing policyholders and those buying new coverage that will be called on to pay benefits in the future."
Will we ever see double-digit premium hikes like in the years past? Hard to tell. But the first rise in short-term interest rates since the financial crisis is a start in helping consumers and the long-term care insurance industry that has been struggling in a low interest rate environment.
Tuesday, December 22, 2015
Have you ever used Airbnb? It’s the online service that helps you find lodging in rooms, entire homes, and even castles and igloos around the world.
It sounds like a great deal for families who want to travel, but can’t afford to buy every meal out and pay for two hotel rooms. I know my nephew and five of his friends rented a three-bedroom apartment in NY for a fraction of what a moderate-priced hotel would have cost.
Just for a comparison I could relate to, I found a room in my area of Palm Beach County through Airbnb for two people 5 minutes from the beach and 1 minute from the golf course for $142 a night in February (the height of the tourist season). A top-rated hotel on the beach will cost at least twice that amount.
If you’re thinking of converting an empty property into a vacation rental to pick up extra money, better do your homework. Municipalities are cracking down on landlords who do exactly that. San Francisco, for one, is seeking civil penalties of up to $20 per day for Planning Code violations; up to $2,500 for each unlawful business act; disgorgement of illegally obtained profits; and attorney’s fees.
I’m going to assume that if you, as a smart landlord, have turned your properties into short-term rentals you’ve abided by the laws in your area.
But what if your tenant snubs his nose at the law and turns your home into a vacation rental?
First off, neighbors and HOAs might have a problem with random people coming and going with their luggage at all hours. Drug dealings, prostitution? Imaginations can run wild. Copies of keys floating around could cause security concerns in an apartment building, too.
Then there is the issue of extra wear and tear on your property.
Suppose you discover your tenant is subletting, and you kick him out? I read about a landlord who evicted a tenant for renting a room to an Airbnb guest for 30 days. The tenant left, but the Airbnb guest wouldn’t budge until his 30 days was up because he wasn’t part of the lease. Imagine moving back into your home and having a new roommate!
An even worse situation is going on in New York where a tenant has amassed $250,000 in fines for illegally turning her apartment into a hotel. The landlord is getting hit with fines, too … $61,000 at the last count.
Although I don’t put much faith in leases, make sure they include no-sublet clauses in case you end up in court. Also, in the rental application ask how many people will occupy the home, and put that in the lease, too. And on your monthly inspection if it looks as though more people are living there than agreed, immediately remind the tenant of the violation in writing.
For more ideas on how to better manage your rental properties, order a copy of my latest book, What You Must Know BEFORE Becoming a Greedy Landlord.
Friday, December 18, 2015
I recently read a blog post about a landlord who walked in on one of his tenants at an inconvenient time. And I thought it might be worthwhile to pass along in the hope that you can avoid making the same faux pas.
This landlord does routine maintenance on his rental homes. And one afternoon he stopped by a rental house to change the air-conditioning filter. No cars were in the driveway or carport. He knocked a few times on the door. No answer. So he let himself in.
He walked down the hall with his ladder and new filter in hand. As he was passing one of the bedrooms, he saw the tenant with her back towards him sitting at a computer. She was stark naked with nothing but her headphones on. She caught his reflection in the monitor and jumped up screaming for him to get to the f*@# out!
The poor guy tried to explain that he hadn’t seen any cars out front and knocked on the door before entering. The tenant, still fuming, told him to leave and in the future give proper notice before entering.
It turned out the tenant’s car broke down the night before and was at the mechanic’s shop. And she was able to work from home that day. The headset was so she could listen to a recorded conference call, which kept her from hearing the landlord’s knocks on the door.
Fortunately, the tenant eventually cooled down and overlooked what had happened. But it could have easily turned the other direction. She could have called the police; she could have tried to sue the landlord; or she could have tied to break her lease. Even if the landlord would have escaped legal repercussions, his cost in time and money could have been significant.
States have laws on how much notice you need to give to enter a rental. For example, here in Florida you need to give 12-hours notice to make repairs. In Connecticut it’s “reasonable notice,” whatever that means.
I suggest you become familiar with your State’s law. You can find a source here. It just might save you an embarrassing moment.
And for more tips on managing your rentals, order a copy of What You Must Know BEFORE Becoming a Greedy Landlord today.
Thursday, December 17, 2015
By 2030, some 20% of the U.S. population will be 65 or older; the number of 85-year-olds will rise more than 50%, and the centenarian cohort will almost triple. On top of that, the number of nursing homes will continue to tumble. So you can understand why it’s becoming more difficult than ever to pick a nursing home for a loved one.
Tuesday, December 15, 2015
Is it that time of the year for you? I’m not talking about Christmas, or Boxing Day, or National Chocolate Day, or any other holiday you might celebrate in December. I’m talking about the required minimum distribution (RMD) you must take from your IRA before the end of the year if you are 70½ or older.
Suppose, though, you start digging through your records and discover that you had miscalculated your RMD five years ago. Should you simply forget about it and hope the IRS never catches on? Is there a statue of limitations on such oversights?
According to IRA expert Ed Slott the IRS generally has three years to come after you for an audit or for more money. But apparently there are no special rules for RMDs.
So get out your checkbook and give the Treasury Department what’s due. And while you are in the giving mood this month, take advantage of National Fruitcake Day on Dec. 27 to re-wrap that rock hard, fruit filled holiday cake and give it to someone … anyone.
Monday, December 14, 2015
You likely find that the cost of operating your rental homes continues to increase year after year. Be it labor, insurance, or taxes … rarely do prices fall. And that’s not even considering a big expense, such a complete air conditioning system. So where does that leave you when it comes time to renew a tenant’s lease and raise the rent? It makes the decision even harder if you have a good tenant you’d hate to lose.
We still live in a free market society; you can try to charge whatever you want. But to stay in business your rents do have to stay in line with the supply and demand in your area. What’s more, I’d rather have a good tenant who pays $1,200 a month than a problem tenant who pays $1,500.
Most tenants are honest, hard-working people who simply want a decent place to live. So run your rentals like a business that has customers. And if you want to keep good, long-term tenants who will not balk at a reasonable rent increase, be proactive.
That means inspect regularly, respond quickly, and be creative. Look at how to improve things throughout the year. Reward early payments, offer extra services like direct deposit, or tenant insurance. Even a gift certificate to a local pizza joint can go a long way.
Other good gestures, for example new paint or carpet or even a security system if they pay the monthly monitoring, could also assure tenants that they’re getting their money’s worth.
Want more ideas on how to become a successful landlord? Then click here to order your copy of What You Must Know BEFORE Becoming a Greedy Landlord.
Friday, December 11, 2015
A landlord was shocked when he found that his tenants had transformed a 3-bedroom apartment into a 10-bedroom apartment. It was what the tenants did next that was even more surprising.
Thursday, December 10, 2015
Security deposits can become a major source of complaints, costing you time and money especially if you end up in court. I’ve found that this is generally the result of not properly disclosing exactly what you expect from the landlord/tenant relationship before they move in.
I let tenants know that $xx of the deposit will be used to clean the carpet when they move out, and they will not get it back.
Also it’s not sufficient to simply state that the premises must be left clean and undamaged in order for tenants to receive their deposits back. Require that they clean the entire home, including the range, oven, refrigerator, bathrooms, closets, cabinets, windows, carpet, and balcony.
Another thing I now include is a bed-bug clause. Right, I’m talking about those small, flat, parasitic insects that feed solely on the blood of people and animals while they sleep. Bed bugs are reddish-brown in color, wingless, range from 1mm to 7mm (roughly the size of Lincoln’s head on a penny), and can live several months without a blood meal.
Bed bugs have been found in five-star hotels and resorts and their presence is not determined by the cleanliness of the living conditions where they are found. So it shouldn’t surprise you if they pop up in your rental.
Let the tenant know that you will have an exterminator certify that your property is bed-bug free. And when they move out, it will be inspected again. If bed bugs are present, the cost to remove them will be deducted from the security deposit.
When the tenant moves out, you must provide a written statement of charges you are withholding and return any balance remaining. Failure to do so could easily land you in small claims court. For instance, in Florida if a landlord who wants to keep the security deposit doesn't notify a tenant in writing within 30 days of the move, the landlord must refund the full amount of the deposit.
And don’t let tenants talk you into using this money if they get behind in rent. It’s there to cover damage beyond normal wear and tear … nothing more.
Want more ideas on how to become a successful landlord? Then click here to order your copy of What You Must Know BEFORE Becoming a Greedy Landlord.
Wednesday, December 9, 2015
As landlords, we usually prefer that certain government entities stay far away from our rental properties for as long as possible. When it comes to the police, tough, we appreciate how fast they respond to calls.
And one municipality has taken it a step further …
Saint Paul’s Landlord Alert Program gives property owners and managers the ability to receive e-mail alerts when there are police calls for certain incidents at their rentals.
Landlords will get public information about why the police were called, information on how to receive a copy of the police report, and any other resources that may be available.
It’s a program you might want to propose to your local officials.
Tuesday, December 8, 2015
In What You Must Know BEFORE Becoming a Greedy Landlord I included this paragraph regarding Section 8 housing:
“On the surface, the main disadvantage I see is that you’ll have to deal with government bureaucracy to receive and maintain approval. The PHA in your area will inspect your property to make sure it complies with HUD’s Housing Quality Standards (HQS). And they must inspect it at least annually.”
Some landlords in the Columbus area see that as a disadvantage, too ... so much so that they’ve pulled out of the program.
Saturday, December 5, 2015
In the wired and wireless world we live in today, connections are ubiquitous. But long-term care often has been slow to join in. Even now, many seniors living in nursing homes are spending their remaining years in “relative” obscurity, looking forward to weekly or monthly visits from family and friends.
Click here for the full article by McKnight’s.