Tag: Property Management

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Short Term Rentals

Top 3 Tools to Price Your Short-Term Rental Perfectly, Maximizing Attraction and Profits

A small home made out of dollar bills
Source: Kostiantyn Li on Unsplash

Pricing your rental property perfectly is a complicated dance.

Price it too high, and you’ll reduce the number of bookings dramatically; price it too low, and you’ll leave money on the table and not make enough profits to cover the inevitable expenses.

So what do you do?

The task defeats most humans, but it’s nothing too tricky for technologies to figure out. So read ahead to learn the top three tools to price your short-term rental perfectly, finding that sweet spot price that attracts enough renters without undercutting your profits.

Criteria for Finding the Perfect Tool for Pricing Short-Term Rentals

There are different ways to price your rental, depending on the type of rental property it is. For example, a vacation rental will be priced differently than an urban apartment rental. And within each category, some subcategories will also change the price (i.e., a luxury condo in New York City will go for more than a standard one-bedroom in Tucson).

The perfect tool for pricing your rental should consider all of these factors and give you a competitive estimate based on comparable properties in your area. It should also allow you to adjust the price according to your goals and objectives, whether you’re looking to maximize profit or occupancy.

So, here are four key things to look for in a rental pricing tool:

  • Ease of Use: The best pricing tools are easy to use and don’t require a lot of data input.
  • Accuracy: The tool should be based on real-time data and accurate market trends.
  • Flexibility: You should be able to adjust the price according to your own goals and objectives.
  • Integration Ability: The ideal tool can integrate with other vacation rental software (e.g., channel managers, property management systems, and property listing sites).

We’ve used these criteria to provide you with five of the best pricing tools in the market today.

Top 3 Short Term Rental Pricing Tools

As a property management company, we’ve used nearly all the tools you’ve heard about. Based on our experience, these are the top five pricing tools we’ve found to be easy to use, accurate, flexible, and integrate with other software easily.

1. Airbtics: Get Ahead of the Pricing Competition

Source: Airbtics

Airbtics is a dynamic vacation rental pricing tool that allows users to filter daily prices of similar rentals based on trends. The tool will recommend pricing based on its machine learning algorithm that uses real-time booking data, so all its suggestions are accurate and considers spikes in supply and demand. You can also integrate it with any property management system or tech solutions you’re currently using.

Source: Airbtics

Moreover, Airbtics charges a fixed rate—unusual for pricing tools that usually takes a 1-2% commission from the user. There’s also a 15-day trial period for property managers with at least 5 properties.

2. Beyond Pricing: Optimize Your Pricing Opportunities

Source: Beyond Pricing

Beyond Pricing is an advanced short term rental pricing software that considers changes in demand on a daily basis, all to help you maximize your short-term rental occupancy and revenue. It even rates your properties with a Health Score to ensure that you’re aware of your opportunities for optimization.

Moreover, you’ll see detailed insights with every price recommendation, so you understand the reason for every suggested price. And it’s not just for the current landscape, as Beyond Pricing will provide forecasts and recommendations for pricing your rental next year.

Source: Beyond Pricing

Beyond Pricing comes with a free insights package, but you can take it a bit further with their paid plans. It also offers custom plans for unique portfolios, and can connect to popular property management systems and channel managers.

3. PriceLabs: Customize According to Market Movements

Source: PriceLabs

PriceLabs is a customizable, data-driven pricing tool to boost your revenue. Its price recommendations are based on the market’s supply and demand, seasonalities, short-term rental trends, special events and holidays, and lead time. It’ll pinpoint the dates where demand is high by checking the data of nearby listings, analyze historical data, and evaluate your listing’s performance to give the best pricing possible.

PriceLabs’ customization features include setting dynamic minimum stays, enabling occupancy-based pricing adjustments, and more. Plus, the tool can easily connect to more than 30 property management systems and channel managers.

Source: PriceLabs

Its pricing structure works as you scale your business, which is perfect for growing portfolios. There’s also a 30-day free trial before a contract that you can cancel anytime, and it charges a flat monthly fee.

Price Your Short-Term Rental for Maximum Occupancy and Revenue

All three of the dynamic pricing solutions above are excellent choices for optimizing your short-term rental prices. They use different methods for price recommendations, but they’re all accurate to your market. And, most importantly, they integrate well with other software solutions you’re currently using.

Of course, the alternative to using technology is to hire an expert property management company that knows the local market inside out. If you’re investing in the Metro Detroit area, give us a call! We have the experience and knowledge to manage your rentals for maximum occupancy and revenue.

Sign up as a REIA member, subscribe to our newsletter, and join our upcoming meeting to get insider knowledge on real estate investing. This is your opportunity to network and become a better short-term rental landlord and investor as fast as possible.

Categories
Landlords

Go Beyond Airbnb: Where Should You List Your Short-Term Rental?

A magnificent cabin nested in the forest
Source: Photo by Madhur Shrimal on Unsplash

Landlords of short-term rentals shouldn’t stop listing on Airbnb. While the platform is the most popular website for finding hotel alternatives, you should also consider other platforms that can increase exposure, generate more bookings, and gain consistent rent income.

So, here’s a list of Airbnb alternatives you should consider listing your short-term rental on.

1. VRBO: The Reach Multiplier

Listing your short-term rental on VRBO (Vacation Rentals by Owner) means that your property is listed on the platform’s affiliated sites: Expedia, Trivago, and KAYAK for increased reach.

Moreover, VRBO isn’t limited to one property type. Feel free to list your cottages, cabins, bungalows, townhouses, lodges, farmhouses, villas—even yachts, castles, and mills on VRBO. The exposure and possibilities you’ll get on VRBO are endless.

2. Booking.com: The One-Stop Shop

Booking.com is another platform that serves more than 1.5 million guests per day in over 43 languages. There are already millions of homes and apartments listed on this platform. Plus, landlords have complete control over their house rules, adding booking prerequisites, and reporting guest misconduct.

It says it’s “serious about your success” and has the safety features to prove its commitment. In addition, Booking.com is a one-stop shop where guests can also book flights and car rentals—so you wouldn’t want to miss the chance to leverage convenience.

3. Plum Guide: The Luxury Platform

Is your property a charming home for bougie guests? Then list it in Plum Guide, where only the most remarkable homes are shown. They are the benchmark for quality rental stays, focusing on providing guests with the finest luxury properties in the market.

Guests have even said that they prefer this platform over Airbnb because Plum Guide’s property photos match the actual accommodation, the reviews are accurate and not glorified, and there was excellent customer service and communication with the host.

However, note that Plum Guide vets and grades properties before allowing them to be listed. This is how it ensures quality over quantity and means that you’ll have less competition on the platform.

4. Agoda Homes: The Asian Market

List your property on Agoda Homes where you can earn extra income by having access to millions of quality travelers daily. There’s also zero commission and plenty of hosting tools to manage your property via desktop and mobile—so you can manage your homes on the road. Plus, Agoda Homes focuses on the Asian market, which means you can expand your reach to other countries.

Agoda Homes’ dashboard for short-term rental hosts is also uniquely designed for easy decision-making and task prioritization, so you’ll have everything you need to increase your bookings.

Expanded Reach + Increased Bookings = Multiplied Profits

Of course, there are other platforms, like Homestay, Sonder, and Blueground, that we didn’t mention in the list. But the point is to make you realize that you shouldn’t stop by only listening on Airbnb when there are many alternatives out there that can give you additional benefits.

Remember that the more you expand your reach, the more bookings you’ll generate—resulting in higher, more consistent profits from your real estate investments.

Do you need more help? Get in touch with me today. You can start by joining REIA as a member, so you can attend our upcoming meetings and receive helpful information via our newsletter.

Categories
Wholesale Wholesaling

How and Why You Should Set Up Recurring Rent Payments for Your Tenants

Source: Photo by Mika Baumeister on Unsplash.

Collecting rent can be one of the biggest hassles of owning rental property. Not only do you have to keep track of when rent is due, but you also have to chase down tenants who are late on their payments.

Wouldn’t it be nice if there was an easier way to collect rent? Well, there is.

You can set up recurring rent payments so that your tenants’ rent is automatically deducted from their bank account each month. Not only does this make things more convenient for both you and your tenant, but it can also help ensure that you always get paid on time.

In this blog post, we’ll explain how to set up recurring rent payments and the benefits of doing so. By the end, we hope you’ll see just how easy and helpful an automatic rent payment system can be.

Why Set Up Recurring Rent Payments

As a landlord, having a reliable, predictable source of income is essential. That’s why automating recurring rent payments can be so beneficial. Here are a couple of benefits:

  • On-time payments: Your tenants will have their rent deducted from their bank account automatically each month. This means that you won’t have to worry about chasing them down for late payments or collecting checks in person.
  • Electronic processing: All payments are made electronically and on the same day each month, saving you the hassle of manually entering tenant information into your accounting software. Most systems can handle automatic payments for you with just a few clicks.
  • Incentivize recurring payments to encourage sign-up: Some payment processing providers include a discount function so you can offer incentives to your tenants for signing up for recurring payments. This can be a great way to encourage more people to use the system, making rent collection easier for you.

Protect your cash flow, and you’ll protect your investments—isn’t that the only thing that matters?

How to Set Up Recurring Rent Payments

Setting up recurring rent payments is relatively easy, and it’s worth taking the time to do so. Here are the steps you’ll need to follow:

  1. Choose a payment processing provider: Decide which payment processor you’d like to use. Some popular options include PayPal, Stripe, Square, and Apple Pay. Each company has its own set of fees and features, so take some time to compare them before making your decision.
  2. Set up an account: Create an account and link it to your bank. This will allow payments to be transferred directly into your account on the rent due date.
  3. Collect tenant information: Collect some basic information from your tenants, such as their name, address, bank details, and rent payment amount. Ensure that all information is accurate and updated before proceeding with the setup process.
  4. Set up automatic payments: Set up the automatic payments for each tenant in your system. This typically involves entering their bank details and setting the payment amount and frequency (e.g., monthly).

Once you’ve completed these four steps, you’re good to go. Sit back and wait for the payments to come flowing in. Your well-deserved cash flow is on its way.

Best Tools for Recurring Rent Payments

We recommend the following payment processing providers for their ease of use and excellent security:

  • Avail: This landlord software is owned by Realtor.com and helps you streamline rent collection (even if you don’t work with a property manager). Avail allows upcoming payment scheduling by automatically reminding tenants before the due date. Tenants who split the rent with their roommates can also divide the bill accordingly.
  • Apartments.com: Previously known as Cozy, this tool automates rent collection and monitors all rental payments from one dashboard. You’ll see everything in one glance. The platform also sends reminders to tenants, just like Avail.
  • Buildium: If you have 50 or more properties in your rental portfolio, Buildium is your best bet. The software can set up recurring and one-time payments for tenants to pay online or offline, where the funds are transferred in a few minutes instead of a few days.

There are others, too, like Zillow Rental Manager, Rentec Direct, TurboTenant, PayRent, and ClearNow. Whichever platform you choose, you can rest assured that rent collection will take care of itself.

Automatic Payments, Automatic Cash Flow

Setting up recurring rent payments is an easy way to make collecting rent more convenient for both the landlord and the tenant. Not only does it help ensure that your rental income is always on time, but it can also save you time and money in the long run.

We hope this blog gives you a better understanding of how to set up recurring rent payments and why it’s a good idea to do so.

If you have any questions or need help getting started, join us as a REIA member today[1]  and attend our upcoming meeting[2] ! We also have a newsletter[3] , so you’re never out of the loop.

Categories
Short Term Rentals

Modern Management: 6 Best Tools for Short-Term Rentals (And How They Can Boost Your Profits)

Source: Photo by National Cancer Institute on Unsplash

There are more than 2 million vacation rental properties up for grabs—and that’s just in the United States alone! You already know that the competition is strong. Plus, you have to constantly deal with:

  • Responding to inquiries from potential guests
  • Updating your property’s availability on multiple platforms
  • Managing the schedules of your cleaning staff
  • Handling check-ins and guest demands

With all these tasks to consider, it’s easy to get overwhelmed—even if you only have one short-term rental property. Luckily, there are a ton of great apps and digital tools to help you automate your most tedious tasks. Not sure where to begin? Read on!

How Will My Short-Term Rental Property Benefit From Apps and Digital Tools?

Generally, people embrace automation when they want to quickly and easily complete tasks. It’s no different in the short-term rental industry, where landlords like you must deal with repetitive chores.

Not only do apps and digital tools clear up your to-do list, but they also allow you to boost your occupancy rates and dominate the competition. Here’s a list of how tools help you manage your short-term rental:

  • Save time: You can automate tasks that are repetitive and time-consuming yet critical to the success of your rental. Apps and digital tools can save you time on listing properties, answering guest inquiries, and managing booking requests.
  • Improve communication with guests: Your guests’ experience in your short-term rental unit is enhanced by messages and reminders that they automatically receive to their phone. Using digital tools to communicate with your guests also helps in avoiding misunderstandings.
  • Increase efficiency: You’re enabled to manage multiple short-term rental units from one central location. Some apps and digital tools even track and analyze data, which allows you to make informed decisions about your business. 
  • Increase revenue: Potential guests receive quicker responses to their general inquiries and booking requests when you automate your messages to them. This can help increase your occupancy rate, which, in turn, boosts your overall revenue.

Clearly, automation allows you to enjoy the benefits of being a short-term rental landlord without having to deal with its associated burdens. But there are so many apps and digital tools out there, that it can be hard to figure out which one is right for your business.

No worries—we have you covered! Here are several tools that we believe will increase your occupancy rates and make your business a huge success. 

6 Best Tools for Short-Term Rentals

From automated reminders to tracking data, there are apps available for every aspect of managing a short-term rental unit. These are our top recommendations:

For Scheduling Cleaners: Breezeway

Managing a cleaning schedule isn’t as easy as you think. To ensure that your guests will always be greeted by a spick-and-span vacation rental, you must have a system in place that allows you to seamlessly coordinate with your turnover service providers.

Enter Breezeway—a platform that features innovative scheduling and quality assurance tools for both cleaning and maintenance staff. It even analyzes how productive staff members are, which allows you to assign the right task to the right person at the right time.

For Synchronizing Your Listings: iGMS

If you want to list your properties across multiple websites, invest in a good channel manager. Aside from increasing your short-term rental unit’s exposure, list synchronization eliminates the risk of accidentally double-booking dates.

iGMS is a challenge manager that allows you to seamlessly list properties on some of the industry’s most popular websites, including Airbnb, Booking.com, and VRBO. It features a world-class dashboard, too, which allows you to easily keep an eye on everything.

For Managing Your Property: Tokeet

Want a fairly hands-off approach to managing your short-term rental properties? Tokeet is your best bet. Its core features include a direct booking website builder, which allows you to easily create your own page for direct reservation management. No more paying hefty commission fees to Airbnb or Booking.com!

Tokeet also offers a dynamic pricing tool called Rate Genie, which automatically updates your rates across multiple channels. It’s powered by data-driven algorithms that determine the best prices for your properties, allowing you to increase your rental revenue by as much as 30%.

For Messaging Guests: Duve

Communicating with guests is a labor-intensive task that takes up a lot of your time. From patiently answering their inquiries to confirming their bookings, you might just find yourself spending hours on your booking platform’s chat function.

Duve allows you to genuinely and smartly manage every single aspect of your guest communications. Send automated messages, provide contactless check-ins, and collect important information before your guests arrive. The single smart platform even offers a customizable welcome app that will enhance their experience and ultimately increase your revenue.

For Turning Your Property Into a Smart Home: Operto

In the short-term rental industry, going above and beyond to provide guests with an excellent stay is key to keeping bookings full. Nowadays, most guests are tech-savvy and work remotely, so giving them a positive experience can be as easy as investing in smart technology.

Operto offers exactly that. It’s an integrated suite of smart home solutions that allows you to streamline your operations and create a contactless guest experience. For instance, Operto implements smart locks and sensors. It can even regulate the property’s thermostat, which saves you big time on energy costs.

For Welcoming Guests: HelloHere

Most—if not all—travelers want to experience new places like true locals. So, if you want to avoid being bombarded with messages about which restaurants to eat at, consider investing in HelloHere, a “digital guestbook” that caters to their every need.

HelloHere offers a destination guide containing every answer to your guest’s inquiries, from fantastic local restaurants to sights that shouldn’t be missed. It also features a live chat function, so you’ll no longer have to worry about guests calling you in the middle of the night!

Automation: A Foolproof Way to Boost Your Business

With countless apps and digital tools available, embracing automation for your short-term rental business is no longer an insurmountable challenge. By investing in these nifty software solutions, you’ll reduce your workload without sacrificing your occupancy rates and revenue!

If you’re a short-term landlord in Oakland, streamline your daily rental tasks and boost your guest interaction today with these top-recommended technologies. We’d love to have you in our community!

Join as a REIA member today to attend our meetings and sign up for our newsletter.

Categories
Landlords

How Should Landlords Handle the Recent Rent Price Decreases?

A woman opening her wallet and realizing there are no bills
Source: Emil Kalibradov on Unsplash

It might have come as a shock to a lot of landlords as market conditions have drastically reversed in the past year, bringing the 20-month streak of increasing rent amounts to a halt. Unfortunately, this drop in rent prices is seen across the nation, affecting many investors’ potential returns.

So, what can you do about it to stay profitable in your real estate investment?

Let’s discuss it below.

How did rent prices decrease significantly?

In recent months, the US real estate market slowed down, where rent decreased by 0.1% across 40 of the most extensive metropolitan areas in August 2022. Renters celebrate financial relief (excellent), but investors clutch desperately to their original investment returns (not ideal).

Here’s a snapshot of the rent price movements across 40 markets, where we see that our home area, the City of Detroit, has dropped 0.5% month-over-month:

Source: Apartments.com

Jay Lybik, CoStar Group’s national director of multifamily analytics, said, “We’re seeing a complete reversal of market conditions in just 12 months, going from demand significantly outstripping available units to new deliveries outpacing lackluster demand.”

Beyond that, places like the City of Detroit are experiencing a labor shortage in the construction and maintenance industry of the City of Detroit. While this news means that it’s harder to build homes (bad news for anybody developing a property), it means that the demand for housing stock is still increasing. And, more importantly, people are competing for a limited number of units (good news for landlords and rental property investors).

If you’re a rental property investor in the City of Detroit, ensure that you stay ahead of the curve and keep your properties in excellent shape to attract and keep tenants. And of course, always keep an eye on the market and prepare to adjust your rents accordingly.

What should landlords do when rent averages decline?

The most important rule in real estate investing is to stay updated with the market’s current status to change your strategy on the fly and avoid significant financial losses. For instance, if you know that there’s an oversupply of rental units in your area and not enough renters to fill those up, opt to lower your rent to attract quality tenants willing to pay for a comfortable space.

But if you think that the rent prices in your area will continue to decline, selling your property might be the best move to make. This tip is especially true if you’re carrying a lot of debt—the last thing you want is to end up upside down on your mortgage.

Of course, there are other strategies that you can do to stay profitable during a rent price decline. Here are 4 tips to maintain financial viability:

#1 – Review your financials and make necessary changes

Go over your finances and see where you can make adjustments. This might mean looking for ways to reduce expenses, like cutting down on maintenance and marketing costs. You should also consider ways to increase your income, such as by finding new tenants or increasing rent for existing ones. If you have vacant units, consider offering discounts or incentives to attract new renters.

#2 – Negotiate with your lenders

This could involve asking for a lower interest rate on your mortgage or a longer repayment period. You might also want to consider refinancing your loan so you can get more favorable terms. This could help you free up some extra cash each month that you can use to cover other expenses.

#3 – Raise rent for existing tenants

If you can, consider raising the current rent amount for your existing tenants. Doing so could help offset any decline in rent prices that you’re experiencing. Of course, you must be careful not to price your tenants out, so raise your rent slowly to keep occupancy up without dragging your returns down.

#4 – Diversify your portfolio

Diversifying your portfolio means investing in other types of property, like commercial or vacation rentals. Doing so could help you mitigate some of the risks that you’re facing with your rental properties and generate additional income to cover your expenses.

Rent Drops Doesn’t Always Mean Cash Flow Decrease

The biggest takeaway from all of these is that landlords should always be updated with the latest market trends so they can change their strategy accordingly. This way, they’ll be able to protect their investment and even grow their portfolio despite a rent drop.

No matter what strategy you use, stay proactive and adapt to the changing market conditions. By doing so, you can minimize the financial impact of a rent price decline and keep your business healthy.

One way to stay updated is by signing up as a REIA member. You can also subscribe to our newsletter and join our upcoming meetings, so you’ll be the first to know any tips or advice we have regarding the real estate market. The market is always changing, so you have to as well.

Categories
Landlords

Pros and Cons: Should You Rent to Section 8 Tenants?

Source: Photo by Jem Sahagun on Unsplash

Section 8 tenants are individuals the government has approved for housing assistance. This program is for low-income families, the elderly, and the disabled to afford safe and clean housing. To be eligible for Section 8 assistance, a family must meet specific guidelines that show they require financial help.

Now, of course, there are pros and cons to renting to Section 8 tenants.

Some landlords may hesitate to do so because of the extra work and paperwork or because they have heard stories about problematic tenants. However, there are still benefits to renting to Section 8 tenants, as you’ll realize below.

We’ve listed all the pros and cons to help you make a good decision.

Pros of Renting to Section 8 Tenants

While most information online (especially in forums) list difficult situations with renting out to Section 8 tenants, there are advantages to accepting them that may change your mind. Here are 4 of them to consider if you’re a landlord:

1. Generate Stable Cash Flow

When tenants have Section 8, the government agency pays their rent directly to the landlord or property owner. This means you’re more likely to get paid on time and in full. In addition, the government will still cover the cost if the tenant does not pay their portion of the rent (usually 30%).

2. Increased Tenant Options

When you open your units up to Section 8 tenants, you may have a larger pool of potential renters. This can be beneficial if you live in an area with a tight housing market or if you’re having trouble finding suitable tenants in the area.

3. Opportunity to Help the Needy

By renting to a Section 8 tenant, you’re getting a good deal and helping someone in need.

Families who receive assistance through this program often have low incomes and would otherwise struggle to find affordable and safe housing. As a landlord or property owner, you can make a difference in their lives by providing them with a place to call home.

Cons of Renting to Section 8 Tenants

Of course, there are also some disadvantages to renting to Section 8 tenants—as with any type of rental agreement. Still some concerns are unique to this type of tenant. Here are 3 of them that you’ll need to consider before taking the leap:

1. More Paperwork and Regulations

Renting to Section 8 tenants requires more paperwork and regulation compliance. For example, you’ll need to keep detailed records of your unit and ensure that it meets all the housing standards set by the government. In addition, you may have to deal with inspections regularly.

2. Limited Options for Termination

If you end up with a troublesome tenant, getting them out of your unit may be difficult. The government has strict rules that protect Section 8 tenants, so you’ll need to have a good reason for wanting to terminate their lease.

The increased complexity of contract termination can be time-consuming and frustrating, especially since it’ll be on top of your already-difficult situation.

3. Possible Lowering of Rent

Contrary to the point earlier, if you live in an area with a lot of Section 8 housing, you may be required to lower your rent to stay competitive. In addition, if the government changes its regulations or funding levels, your rent could decrease as well. This may lead to financial problems down the road.

Find Quality Tenants—Section 8 or Not

There are pros and cons to renting to Section 8 tenants. So weigh all your options carefully before deciding. If you decide to rent to them, be prepared for the extra paperwork and regulations involved. You’ll increase your tenant pool, but you’ll need to know the caveats that come with it.

Do you need help finding good tenants? Join as a REIA member today!

We have regular meetings and newsletter that you can greatly benefit from as a landlord. Don’t miss out on this opportunity to further your investment knowledge and reach your investment goals wisely.

Categories
Landlords

5 of the Most Important Clauses Your Lease Agreement Should Have

: A beautiful single-family residence along E Kirby St., Detroit
Source: Zillow

We’ve seen many poorly written leases – and the legal implications can be devastating. That’s why it’s important to avoid cookie-cutter leases that fail to give you the protection you need as a landlord.

Because the truth is this.

No matter what kind of property you’re leasing, you need to have a great, not just a good, lease agreement. This document will protect you and your tenant by outlining the lease terms, including the rent amount, length of tenancy, and rules for using the property.

To help you create a strong lease agreement, we’ve compiled a list of 5 critical clauses that every lease should have, in addition to term, lease payments and other basics.

1. Use Clause

The first clause in your lease agreement should be the use clause. This clause outlines how the tenant may use the property. For example, if you’re leasing a commercial space, the use clause might specify that it can only be used for retail purposes. If you’re renting a residential property, the use clause might determine that it can only be used as a primary residence.

2. Subletting Clause

The second clause in your lease agreement should be the subletting clause. This clause outlines whether or not the tenant is allowed to sublet the property. If you ‌allow subletting, include provisions about how it must be done (e.g., the tenant must get your approval first).

3. Maintenance and Repair Clause

The third clause in your lease agreement should be the maintenance and repair clause—this clause outlines who is responsible for maintaining and repairing the property. In most cases, the landlord handles major repairs, and the tenant is responsible for minor repairs and routine maintenance.

4. Utility Clause

The fourth clause in your lease agreement should be the utility clause—outlining who pays for utilities, such as electricity, gas, water, and trash service. In most SFR residential leases, the landlord is responsible for paying for trash service, while the tenant is responsible for paying for electricity gas and water.

5. Security Deposit Clause

Your lease agreement’s fifth and final clause should be the security deposit clause. This clause outlines the security deposit amount and how it will be used. For example, the security deposit can be used to cover damages to the property or unpaid rent at the end of the tenancy. Be sure to include provisions about how the security deposit will be returned to the tenant at the end of the lease.

Don’t Make Mistakes with Your Clauses

Including these 5 crucial clauses in your lease agreement can help ensure that you and your tenant are protected throughout the tenancy. And don’t forget that these aren’t the only clauses you should include in the agreement! Several other clauses are commonly included, such as a late payment fee clause, a pet policy clause, and a no smoking clause.

Do you need help drafting a strong lease agreement? We can help!

Join as a member today and get in touch with us. You can also sign up to our email newsletter so you never miss any important information like this.

Categories
Landlords

How to Evict a Tenant in Michigan in 2023

Source: Sandra Davidson Real Estate Agents

No matter how well you screen your tenants, you’ll inevitably come across problematic ones who are more trouble than they’re worth. In addition to tenants that stop paying their rent for various reasons, some could be running a liability nightmare or shady business out of your property (putting you at risk of legal consequences), while others may be slobs turning your beloved unit into a garbage dump. You’ll have to evict these problematic tenants before they negatively affect your investments.

But evicting tenants is time-consuming and complicated, requiring you to understand all the regulations involved.

In this article, we provide an overview of the Michigan eviction process to ensure that the ordeal goes smoothly. We also give some information for you to navigate the court system if your tenant contests.

The 5 Steps to Evicting a Tenant in Michigan

There are many reasons why tenants can be evicted from their rental property in Michigan, but here are a few of the most common ones. Having proof of this behavior is not enough to evict them—you should follow specific procedures before they can be legally forced to leave your property.

Here are the steps to evicting your tenant in Michigan:

Step 1: Identify the Grounds for Eviction

As a landlord, you must abide by Michigan’s landlord-tenant laws, which stipulate that tenants may be evicted from a rental property for the following reasons:

  • Failing to pay rent: Tenants who fail to pay their rent on time without giving you any prior notice may be evicted according to Michigan law. Rental payments are immediately considered overdue when they are paid a day past the deadline. A grace period is sometimes provided.
  • Violating the rental lease agreement: Both parties must comply with the signed rental lease agreement for the tenant’s entire stay. While the specific terms vary from landlord to landlord, it usually includes rental property damage.
  • Conducting illegal activity: Under Michigan’s landlord-tenant laws, illegal activities include theft, violence, assault, and involvement in the creation, distribution, or consumption of controlled substances (e.g., drugs and other illegal substances).

If your tenant does one of these things, start the eviction process by serving the tenant with an official written notice. Each reason for eviction has its own rules regarding the length of notice.

Here’s a quick breakdown of each:

Step 2: File the Complaint in the Appropriate Court

After issuing the tenant an eviction notice , the next step is to head to the justice court where the rental property belongs. There, you must file a complaint, which typically costs $45 in Michigan. You might get additional fees of up to $150 though if your case involves overdue payments or damage fees.

An officer of the court will then serve your tenant with the complaint and court summons at least three (3) days before the hearing. They must do so via first-class mail and at least one of these:

  • Giving a copy to the tenant in person
  • Leaving a copy with the tenant’s family member with a request to deliver it to the tenant
  • Posting a copy on the main entrance of the tenant’s rental property

The officer should also have a return receipt confirming that the complaint was sent via first-class mail.

Step 3: Attend the Court Hearing

The eviction hearing takes place within ten (10) days of the summons being issued by the court. However, the court may sometimes decide to hear the case within just five (5) days.

Tenants may object to the eviction by filing a written letter to the court, but it’s not a legal requirement.

If the tenant fails to show up for the hearing, the court will issue a default judgment in your favor. In some cases, the judge can choose to postpone the hearing for seven (7) days, but if they don’t, then they’ll issue a writ of restitution, allowing the eviction process to continue.

This step of the eviction process is usually over within five (5) to ten (10) days, depending on the court’s rules. But if one party files an appeal against the judge’s decision, it will likely take longer.

Step 4: Wait for the Issuance of the Writ of Restitution

If the court decides in your favor, it will issue a writ of restitution, which serves as the tenant’s final notice to vacate the rental property. It also gives the tenants the chance to remove all their belongings before the authorities forcibly remove them and return the unit to you.

The writ of restitution is usually issued ten (10) days after the court serves its judgment, which gives the tenant enough time to file an appeal. However, if they are being evicted for illegal drug activity or health and safety violations, then the writ is issued immediately.

Step 5: Give the Writ of Restitution to Law Enforcement Officials

You have to give law enforcement officials the writ of restitution within seven (7) days of it being issued by the court. However, state law does not specify how quickly you must act, so that’ll be up to your discretion or the number of other evictions already scheduled.

Some areas have introduced guidelines on how quickly the authorities must carry out the writ of restitution, so be sure to familiarize yourself with your local laws.

After receiving the writ of restitution, check with your area’s laws to see if there are local guidelines on how quickly the authorities must carry it out.

Evicting Tenants in Michigan is Complicated, But Doable

Evicting a tenant takes anywhere between two weeks to two months, depending on your circumstances and the reason for eviction. It takes even longer if the tenant decides to appeal the court’s decision. The eviction process may be complicated, but it’s easier with a trained lawyer and property management company.

Get in touch with our team today to help you with everything—from serving official notices to providing writ of restitutions. You’re in good hands with our experienced, expert team.

Categories
Flipping

Does House Flipping Qualify as QBI Deduction?

Man repairing a house
Source: GO Banking Rates

Over the years, the IRS has been cracking down on taxpayers taking advantage of the qualified business income (QBI) deduction. Because of that, some house flippers are wondering whether flipping houses can still qualify as a business.

So, let’s dive in and see what you need to know.

QBI Deduction: What Is It and Who Can Claim It?

QBI deduction is a tax break that allows business owners, freelancers, and independent contractors to write off up to 20% of their total taxable income. This effectively decreases the income tax they owe to the IRS. However, not everybody is eligible for it.

For instance, only business owners with pass-through income may take advantage of the QBI deduction. This includes the following:

  • Sole Proprietors: An individual, such as a freelancer or independent contractor, who runs an unincorporated business
  • Partnership Members: Two or more people who made a formal agreement to oversee a business together, sharing in its profits and liabilities
  • S-Corporation Shareholders: People who own shares in an S-Corporation and include its income and/or losses on their personal tax returns

In short, you’ll have to double-check if you qualify for the tax deduction to take advantage of it, as there are some income limits and business types that may affect your eligibility.

What Does Not Count as QBI?

Now, not all income types qualify for QBI. In fact, there are nearly 20 different income types that the IRS does not consider as QBI. Here are a few of them:

  • Income from out-of-country businesses
  • Investment items (e.g., capital gains and dividends)
  • Interest income not related to a business or trade
  • Annuities received from something unrelated to a business or trade

Of course, as a house flipper, your only concern is if income from flipping is included on the IRS list. Well, it’s not specifically mentioned by the IRS. So, are you eligible for the 20% tax write-off?

Does House Flipping Qualify as QBI Deduction?

The law says that the QBI deduction will only apply to taxpayers who are sole proprietors of a business or trade, a member of a partnership, or a shareholder in an S-Corporation. So those in the fix-and-flip business will be eligible if your operations are conducted within one of these entity structures.

However, there are still rules dictating how much you can deduct from your total taxable income:

  • If you’re single or unmarried and your total taxable income is less than $164,900, then you can deduct 20% of your qualified business income.
  • If you are married and filing jointly with your spouse and your total taxable income is less than $329,800—then you can deduct 20% of your qualified business income.

Because of W-2 wage limitations, things become more complicated when your total taxable income exceeds these thresholds. If this is your situation, then it would be better to call an accountant for advice.

Confused? Don’t sweat it—here’s a quick example to help you understand QBI deductions better:

Let’s pretend that you’re a single-house flipper whose net operating income is $100,000 and W-2 wages are $50,000. Since you fall below the $164,900 threshold, you can deduct 20% from your net operating income, amounting to $20,000.

Assuming that you belong to the 24% tax bracket, this QBI deduction will save $4,800 on your tax bill.

Yes, House Flipping Qualifies as QBI Deduction

The QBI deduction has undoubtedly benefited a lot of industries, particularly real estate, where house flippers are now seeing more profits earned from every sale they close. But if you are still confused about the calculations, then we recommend working with a certified public accountant (CPA).

Calculating your QBI deductions is a huge headache and as a busy house flipper, you simply do not have the time for that. That is why you should consider joining the Real Estate Investors Association of Oakland County—our members have access to tons of resources that help them take their house-flipping business to new levels of success.

From landing sales on your fix-and-flip projects to help you determine your tax write-off, REIA has everything you need. Interested? Check out our website to see what your next steps should b

Calculating your QBI deductions is a huge headache—which you may not have the time for. Consider reaching out to REIA and our team of experts to help you with everything. Subscribe to our newsletter as well and join as a REIA member to attend our upcoming meeting!

Categories
Landlords

Minimize the Learning Curve: 4 Expert Tips Beginner Landlords Need to Know

A young man looking professional in his stylish suit
Source: Photo by Austin Distel on Unsplash

Landlording can be a lucrative business, but it also comes with its own challenges. That’s why it’s essential to minimize the learning curve as much as possible and get tips from those who have been in the business for a while. You don’t have to take the trial-and-error approach if you already know the “secrets” and tricks to landlording successfully!

Read on to know the four expert tips for successful real estate investing.

Make It Difficult for Rental Advertising Scammers

Unfortunately, there are a lot of rental property scammers out there—especially on Craigslist. One of the common scams is where other people will steal your real estate listing, use the property information and photos, and replace the contact details with their own numbers and email addresses.

They’ll then:

  1. Attract interested tenants
  2. Say that they’re “currently out of the country” and can’t turn over the keys to them
  3. Have the tenants hire a locksmith to change the locks themselves
  4. Collect rent money and security deposit

Then disappear into thin air. You’ll be left with clueless tenants you didn’t get to screen, and a rental property you can’t rent out without telling the scammed tenants to go.

How can you avoid these scams?

Be proactive and mark your photos with your phone number and contact information. Scammers won’t take the extra time and effort to remove your watermarks; they’ll skip over your listing and look for other opportunities elsewhere.

Another tip is never to publish the actual address of your home. Instead, use the nearest cross streets to give tenants a good indication of where your property is without revealing the address to scammers.

Be Attentive and Creative in Screening Tenants

The ultimate goal of screening tenants is to ensure they are responsible people who’ll pay rent on time, maintain your property well, and abide by all the clauses in your lease agreement. In other words, the best way to avoid bad tenants is by having a good screening process.

Here are our pro tips on how to screen them:

  • Assess their cleanliness: Walk them to their car. Take a peek at how clean or dirty their car is inside. Chances are, if their vehicle is filled with garbage (like this poor vehicle), they’ll treat your rental home the same way, too. Their car is a reflection of what’s to come for your home. Or even do a surprise visit to their current residence – how it looks is how your property will look after they move in.
  • See if they have pets: Don’t ask if they have animals, because they can easily say no to that. Instead, ask how many animals they have—indicating that you already know they have pets and you only want to know how many of them there are. Make it a bit harder for them to lie.

Moreover, don’t believe anybody who says that their animals will “live somewhere else”. All too often, those animals will only live elsewhere for a while before moving into the home.

In other words, make it slightly more difficult for them to hide secrets from you. By checking their car and assuming that they have pets, you’ll get more honest answers out of the applicants, making it easier to decide if you want to accept them as your tenants or not.

Be Cautious in Accepting Upfront Payments Covering Multiple Months

Receiving upfront rent payments may seem great for you. You get to secure the money earlier without having to chase tenants for payments every month. However, take note of the following:

  • Is it legal? State and landlord laws might have a maximum upfront rent payment allowable, while some will require you to pay interest on it. Ensure that you’re familiar with the laws before accepting any upfront rent.
  • Why can the tenant afford it? Did they come upon some money and want to ensure that it goes somewhere necessary before they spend it irresponsibly? If that’s the case, they might not have a stable income or employment to afford the home in the first place.

Of course, there are exceptions to these situations. If you’re renting out to students, for example, the parents might pay upfront rent so their family won’t have to worry about paying monthly rent anymore.

Have a Thorough Lease Agreement

You may be tempted to use online lease agreement templates so you won’t have to create one from scratch. However, barebones templates won’t do much in protecting you or your investment property.

Plus, there are specific state and local landlording laws that you’ll have to consider in your lease, and other rental-specific rules that you’ll want to have (e.g., regarding smoking, pets, or painting the home’s interior). These are things that generic templates won’t guarantee or cover.

Instead, everything you want the tenants to know should be included in the lease agreement, so use online templates only as a guide to creating your own document.

Once your attorney approves the draft, sit down with your tenant and go through the entire thing. Don’t assume that they’ll read the agreement on their own—most of them will skim through it and call it a day. You’ll end up with tenants that will likely forget your rules, creating many problems down the line that could’ve been avoided in the first place.

Ensure that they know and understand your rules by having them put their initials at the start of every paragraph or sign every page of the agreement as confirmation. If anything unfortunate happens in the future, the tenants won’t have any excuse to say that they didn’t know the rental lease guidelines.

Pro Tips for a Successful Real Estate Investment Business

There are many other pro tips that you can learn from experts. Knowing these secrets is the best way to ease yourself into the rental business, become a great landlord for your tenants, maintain your real estate property, and protect your monthly cash flow for investment success.

Become a successful landlord today! Get in touch with me or my team at Logical Property Management.

We’ve been managing properties for more than two decades now, and have more tips and tricks to share for a thriving rental property business.

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