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Purchasing an Apartment Complex

Apartment Tenants: A Fire Hazard?

Fires can be devastating; homes can be gutted, an apartment complex burned to the ground, and lives taken. But most devastating may be that it could have been avoided. Fires can be caused by various means such as extension cords being overloaded and used improperly, exposed or frayed wiring, candles, lighters, dryers, cooking and grease fires, or heaters too close to other objects or in need of a clean. In many of these situations, prevention is simple by merely unplugging unused or unmonitored electrical equipment.

But apartment managers and rental property owners beware. A new type of fire is on the rise: Meth fires. Meth fires are not an uncommon event anymore and nor are they just for the rural area. Next time when watching the news, take note of where these meth labs are set up. These meth cooks seek out rental properties in suburbia land. It offers them the safe image they're seeking. Take the case that occurred in Cullman, Alabama just last month. This meth lab caused a fire in city apartments. Mark Meherg and Joshua McAlpine were arrested for unlawfully manufacturing a controlled substance. So how was this discovered? It was a scenario where smoke was seeping from the apartment window and a potent chemical smell was in the air. Officers checked it out and sure enough evidence showed they'd been making methamphetamines. This is a Class A felony which can result in life in prison (Read the full story here).

If we were renting to such tenants, it's an environmental catastrophe lurking around the corner. These are people that aren't trained chemists, but yet this concoction of corrosive chemicals is more hazardous than any legal chemical plant. The gases created are flammable and are usually not sealed off therefore a mere pilot light on a heater could put the whole property in flames. And after the fire, who knows the long term effects to the property such as residual chemical contamination, and even neighborhood quality of life. Rental property owners end up paying for this. Why? This meth activity attracts other criminal activity, affecting property values. This then can affect whether good tenants desire to rent where such a history has occurred. Eviction periods and the lack of good renters then directly affect the pockets of the property owners.

As property owners, we need to use all the tools available to know who we're renting to. The most obvious tool -- at least initially -- is to perform a resident screening. This can provide us with crucial information. After the resident screening and our good renters are settled, we must still observe with our eyes wide open. Look for potential indicators of meth use such as falling behind in rental and utility payments, or keeping a filthy house. Other signs may be a change in car traffic (ie. expensive vehicles out of place or cars stopping for short periods of time), or disheveled visitors, visitors bringing in tools to trade for drugs, and children or pets showing signs of neglect.
So if worse case scenario, we do have tenants that are high risk and even a fire hazard to our property, what fire safety precautions must we take?

• Every apartment needs to have a smoke detector.



• Every apartment should have a carbon monoxide detector.



• Learn how to use the fire alarm system and recognize the alarms as well as knowing where each alarm is located.

Property Investing with Wisdom

With the downturn in the economy, property prices are still relatively low and interest rates are down. If we're investors, this would seem like the perfect time to invest in properties, but it's not as simple as purchasing a property and then allowing the rental checks to flow in. Perhaps to some, but as a mere income generator we're not paying much attention to the actual property so how long can this kind of small business truly thrive? There are key choices to make in the process. One of the first questions to ask ourselves is whether we'd look after the property ourselves or hire a property manager. What are the pros and cons of this choice?

Much of this decision depends on our time constraints and financial resources. Do we have the time to screen our potential renters, seek out those overdue rents and then maintain the property? No problem we may think. True if we have good renters, but wait for those bad tenants . . . then the difficulties may arise. If we're serious, we need to do our homework. It may be in our best interest to hire a property manager -- we'd want to take into account their commission rate -- or decide if we really have the time to oversee our properties. We can expect the positive -- all great tenants -- but we must also prepare for the worst. It's only then that we have a chance of running this small business successfully. What kind of information should we be aware of?

• At a minimum, perform a resident screening on our potential tenants.




• Understand the law and how to enforce lease agreements. For example there are ways to quicken evictions with our nuisance renters especially if we're dealing with gangs and drugs. Working with the police could enable us to legally get them out.




• Are we a handyman? Do we know how to repair things on our property?




• Are there safety hazards on our property that we need to remedy?




• Know the neighbors. Let's be courteous towards them and do all that we can to seek out good tenants. We do have a responsibility to the neighborhood and our community.

The Smoke Screen

When I was a kid, smoking was for the supposed cool older teenagers and some select adults. I remember sitting in the back seat of my friend's car enveloped in a shroud of smoke exhaled by her mother. Her mother had pretty painted nails and a long, delicate cigarette held between her fingers, but I had a headache and my eyes hurt. It didn't seem so cool after all and then there were the commercials with the catchy jingles --smoking makes your teeth yellow, smoking makes your breath smellow, I'd bellow that song to my neighbor's girlfriend when I'd jump out from behind a bush, catching her lighting up and wishing to educate her. Nowadays we're a little smarter and more aware of the health risks. By law, smoking is limited in many social gathering places such as bars and restaurants. Part of the solution is to have certain designated smoking areas, but in many places there is a smoke-free policy. No longer can you light-up in airplanes -- nowhere -- not even in the bathroom. With this, it may be due time to have residences that are smoke-free. Perhaps as part of our resident screening process, we may want to screen out are smoking renters.

So this may seem harsh, but it depends on whether you're a smoker or not. It's harsh to breathe in that second-hand smoke also. It's up to the landlords whether they require all or part of the building to be smoke-free. But really, as a landlord, would it really help us if we prohibited smoking? Or would we scare away potential renters and therefore lose money? Let's look at the benefits of a smoke-free environment.

Less complaints from non-smokers.
Insurance premiums will be less in a smoke-free building because the risk of a fire will be less.
Smoke stains from nicotine are dirty and difficult to remove and in order to have a gleaming rental for a new renter -- increasing the potential of renting -- more cleaning is required and therefore more costly.
And the most important issue for everyone . . .
The health issue -- second-hand smoke. Most people will not rent anything if it compromises their health or the health of their family.

What exactly is second-hand smoke? Second-hand smoke is a combination of smoke exhaled by the smoker and also the smoke coming right from the burning tobacco. And what are the risks?

• The immediate risk is irritation. Second-hand smoke can cause a sore throat, nausea, dizziness, headache, cough and eye irritation.
• Long-term -- lung cancer in non-smokers is believed to be mostly due to exposure to second-hand smoke.
• Second-hand smoke contains a number of harmful chemicals, including carcinogens, but also chemicals that can block and harden arteries which in turn can cause hypertension and eventual heart attacks.
• Asthma and smoking don't mix, either by exacerbating the asthma or inducing it.

Cold Eviction Laws?

What do you do if you have bad tenants, they only pay rent when it's convenient, and your good tenants want them out? Simple you say, evict them. Not so easy in Cook County, Illinois. Why? There's a court order that doesn't allow evicting tenants when the temperature is below 15 degrees, it's extremely snowy, or it's holiday time. That's compassion, we say, there's nothing wrong with that. But what if some tenants do have the money but they know they can get away with it when Jack Frost is in town. Who then pays? It's the property owners.

Harold Slinkman, with sons Mike and Mark, own about 50 apartment buildings in the southern suburbs of Cook County. Mike Slinkman isn't pleased with Cook County Sheriff Tom Dart's acts of compassion in refusing to implement court-ordered eviction notices on tenants. Dart denies this, claiming that he only won't enforce it on those people who are stuck in a home foreclosure. However Mike Slinkman claims that it's the 10% who are working the system and who stop paying rent for the cold months of November through February -- these are the tenants causing him grief and that he can't get rid of. Slinkman believes in compassion but also justice. He volunteers in a homeless shelter, he's helped people who have been down and out, but it's the dishonest ones that may cost him his family business.

So is Sheriff Tom Dart being compassionate? His actions and responses don't add up. The original Cook County Circuit Court order had absolutely nothing to do with home foreclosures or the economic difficulties we all now face -- rather it had everything to do with the outside temperature and not endangering people by putting them out on the street. And not only that, but Dart was never consistent, putting people out one day and not the next. It's not a happy story when a property owner has to depend his livelihood on the whims of a Sheriff (Read all the details here).

As property owners, it's essential that we do all that we can to find honest tenants. We then wouldn't need to rely on laws to protect us -- which obviously sometimes don't -- but then again we don't live in Disneyland and we don't all have crystal balls. We can use all tools available such as resident screening on potential renters and clear and concise contracts. After that, it's the whim of the Sheriff . . . or not.

Curb Appeal and Renting

When we're apartment owners and we're looking for good tenants, there are a number of things to take into consideration. We perform the resident screening, ensuring we're not renting out to criminals or deviants or people who have no way to pay their rent. However before we even get to that point and decide whether to rent to prospective tenants, we have to attract tenants. The nicer the curb appeal of our complex, the more likely we'll have renters knocking at our doors and then we won't be so desperate to accept anyone who approaches.
Here are some tips to increase curb appeal:

1. Clean the exterior. Pressure washers are miracle workers, cleaning filthy exterior finishes due to dust, wind, rain or snow. These can be rented, but may be a good investment if it's something needed to be done often.
2. Is your complex an eye-catching color package? Do the bricks compliment the color of the window trims or doors?
3. Trim shrubs and bushes. If the outside is clean and pristine, it hopefully reflects a similar interior. Do these bushes block natural light from entering windows?
4. Widen your walkways so more than one can walk side-by-side.
5. Make your complex unique with pretty seasonal flowers, attractive paving stones, hidden benches -- anything that welcomes potential tenants and makes them feel at home.

Remember, potential renters can lack imagination. If the outside needs some work, they'll assume the inside does also. Even if you're in the middle of renovating, it can sometimes be difficult for others to picture the final result. And if they do show interest, chances are it'll be "let me know when it's complete." So don't be hasty, do your advertising WHEN you're ready for residents and they'll be ready to sign. This way, we'll get the pick of the tenants and we won't have to be desperate when our resident screening process gives undesired results.

A good example of what not to have was found in two three-story apartment buildings in Oakland, California. This rundown complex had no power, no running water and was infested with rats. Apparently the owner had passed away and the widow couldn't stay on top of the maintenance or the payments. The Oakland fire officials condemned the buildings and the nearly 200 tenants were required to leave and go to the emergency shelter. (Read the full story here).

Renters from Hell . . . or Not?

On August 16th, two apartment complexes in Waco, Texas filed lawsuits against a number of former renters being accused of property damage, resulting in hundreds and even thousands of dollars. These apartments are located in upscale areas and the tenants are professionals who would be considered the cream of the crop when considering their finances. The claims are apparently legitimate, however a few seem unjustified. One couple in question was Baylor University associate professor Sung Joon Jang and his wife. And the allegation? Damage to carpet and countertops. They've since prevailed at trial, claiming the apartment was actually in better condition when they left. The prior tenant to the Jangs testified that she and her family caused or inherited these damages. The jury has now ordered the complex to fork up almost $12,000 to repay the Jangs for all their legal fees. Another couple who are currently fighting a property damage allegation -- specifically carpet -- is Mike and Karen Singleton. They said it was a direct result of the toilet hose disconnecting while they were at work. The case is still pending. To view the full story, read it here: Waco Apartment Complexes Taking Many Former Tenants to Court Over Damages

So yes, it's important to protect yourself and your apartment complex but make sure you're going after the right tenants or it could end up costing you even more and the lawyers will be the ones filling their pockets.

When an apartment is really damaged maliciously or through negligence, the landlord faces a number of potential financial problems; repair work, loss of rental income, tenants vacating without paying rent. Or if the residents do stay and don't pay, it can be time-consuming to get them out. Recently I read a post of a landlord who rented to a young couple with a toddler. The background and credit checks went well and they happily moved in. The first month, they paid no problem. The second month, they were a couple of hundred dollars short but promised to pay soon. Long story short -- and you can read the post yourself at Be careful who you rent to -- when they finally vacated a short time later, there were doors destroyed, a microwave oven stolen and dirty diapers all over the floor. And of course no forwarding address or phone number was left behind.

It's crucial that we be as thorough as we can when screening residents and checking references. Obviously for this landlord, even with the background check, it was ineffective. A previous landlord may help decide for you. But check property ownership and make sure prior landlords aren't friends merely playing the part. And if you do decide to rent, get the oral agreement in writing. Write out a lease, be as specific as you must be. Think about when you rent a car, they check for dings before you rent. Do the same with tenants -- write any prior damage -- respect for respect. You'll then both know if damage was incurred. Most importantly, even if you're a veteran landlord, keep up with the changes in the law so that you can protect yourself as best as you can. You want to trust others, but protect yourself first, knowing who's done the damage. Need more convincing? Check out these youtube and metacafe videos. I think it'll do the trick.

Renters from hell

Tenants from Hell

Seek for the Good Renters

When the economy was doing well, property owners routinely performed financial background checks as a way of screening their potential tenants. With the downturn, things have changed. There are a number of families who have had their mortgage holder foreclose on their homes or who have even placed a block on their credit file because of increased identity theft. So what does this mean to the property manager? Many times it can result in a loss of good renters their credit profiles may dip below established minimums. And the ultimate loss? Good renters are what make a property investment worth its time and money. So perhaps in this day and age, we must redefine what a good renter is.

In this economy and in today's world, it's generally not the norm to work the same job from the time you leave school to the time you retire, which in a financial background check equates to short-term employment history with various companies. Gone are the days of father coming home at 5 sharp and mother with a steaming meatloaf and mashed potatoes on the table. In many homes, two parents work and a call to Pizza Hut is our version of a home meal. With that, it's imperative to acknowledge that a steady income in this unstable economy is different to our parents' generation. A trustworthy income rather may be a tenant with a speckled career history. Therefore, don't make all decisions because of a result of a credit report. Weigh all the screening criteria.

So as a landlord, who is our golden renter? Picture a successful business person, drives a snappy sports car, perfect teeth, hair and clothes, and always has their rent on time. BUT, they hound you day and night. They have no concept that you actually have a life. Their manners stink and their parties are a nuisance to the other tenants. They are a continual source of stress. Or imagine a lovely couple -- the sweetest couple -- but they have no jobs or motivation. They make you chocolate chip cookies the first of every month and apologize profusely about no money -- but they will pay of course. And sometimes they do, but it's never a sure thing when that will be. The important message? There are two vital components to seeking out good renters: a steady income -- albeit dappled -- and courteous tenants.

As property owners, it's really our responsibility to find these quality renters. And with quality renters, we'll have successful relationships with our tenants.

Read a renter's recent horror story. This renter had plenty of money -- a steady source of income -- but along with that, a steady source of black sludge and fake tanner. This story involves America's Next Top Model, CariDee English. When you skim through this article, it's a gentle reminder that seeking the good tenants involves more than mere money. Read the full story here: Craigslist life lessons. Don't rent your apartment out to former reality show contestants.

A Property Manager's Safety Guide

A hot topic right now is the story of Amanda Knox -- the 21 year old Seattle native who went to Italy to study abroad for a year. The twist is that she's been sitting in an Italian courtroom for the past five months, accused of slaying her British roommate, Meredith Kercher, in November 2007 in Perugia. Read the full story here: Amanda Knox Has "Nothing to Hide"

This kind of story brings up a lot of emotion and one hopes the truth will come out and justice will be served. Whatever the truth may be, it causes some to question the quarters these girls were residing in. Were these residents' screened? How safe were they really? What if it was a visitor who committed this horrendous crime or a lurking stranger around their residence? If you have a loved one living away from you whether in a foreign country or in an apartment down the street, resident safety should be a priority.

And if you are a property manager, potential renters want to know that you're serious about protecting them. For me, when something is written down and handed to me -- facts about what is being done concretely -- that goes a long way. So property managers, give your staff and residents a guide to your safety plan. Here are some quick tips for such a guide:

1. Awareness

• Have residents meet their neighbors. So what can you do as property managers? Promote community events so neighbors are aware of one another -- build relationships -- and hopefully look out for each other.
• Set up a community website. This would enable current community events to have a venue to be listed and could also double as a community watch program.
• Staff and residents should keep a close watch for strange activities and even suspicious people, packages and cars.

2. Duties of the Investor/Property Manager and Staff

• Have a resident screening policy in place. If not, these tenants may pose a high risk to your property investment. This same policy should adhere when authorized tenants bring in roommates. Policies need to be clear and upfront when new people are added to an apartment etc. such as additional charges and the same screening process.
• Keep good communication with your tenant.
• Staff should have an ID card on constant display.
• Ban door-to-door solicitors.
• Install alarm systems.
• Good lighting, angled mirrors, and clear views are a necessity. Parking areas, hallways, stairways, laundry rooms, entrances and any other common areas should be well-lit. Be vigilant when light bulbs burn out to replace immediately. Trim shrubs and trees to maintain clear views.
• Locks and peepholes should be updated. Never keep old locks when new residents move in and install deadbolts and peepholes. Sliding glass doors and windows also need locks including dowels to prevent from opening from the outside. Even place crime prevention stickers on doors and windows as an extra safety measure.
• If illegal activities are being conducted by tenants, report it immediately otherwise you may be liable and also the quicker it's reported, the sooner it can return to a safe residence, attracting good quality tenants. If not reported, it can also affect the value of your property.
• Have a noise code of honor in place. If noise violations occur -- such as loud music too late, barking dogs all hours of the night -- have penalties and warnings as part of the contract. Bad sentiments will run through the community which is not what you want if trying to protect your investment.

3. Expectations of its Residents

• Don't put spare keys in obvious places, such as under the doormat or in the mailbox.
• Don't put your full name on your mailbox and even in directories.
• When on vacation, use timers on lights and televisions to maintain the appearance that someone is currently at home.
• If you're aware of any illegal activities of other tenants, report it immediately. This will maintain a safe living environment.

These tips will not only allow the manager to feel he's done all in his power to protect his residents but it's also a demonstration that this apartment/condo does indeed take the safety of its potential renters seriously.

Resident Screening: A Saving Time & Money Tool

A disgruntled tenant can cost a landlord a big chunk of change. This can be the case in both the private and public sector, and if we're talking public housing -- it could cost the taxpayer too. Take an example from Australia where some public housing residents have cost the Victorian taxpayers millions of dollars in repairs because they've decided to trash their homes. For example, a 39-year-old single mother left piles of garbage to clean up, racking the taxpayer's bill up to $20,908. Or take the case of a single 60-year-old woman; her cost -- $20,641 in damages. Whether we're involved with private rentals or public housing, it's crucial that some kind of resident screening comes into play or we could be knee-deep in our tenants' trash; trash that we end up cleaning up while throwing away money. Let's go over resident screening criteria that will protect us in the long run. These will be business rules -- a good policy -- that we must stick with, no emotion necessary. No emotion? Maybe that sounds harsh, but rules are necessary and a seemingly nice person on the outset may have a criminal record the length of your arm lurking in the under layers of a three piece suit and magnetic smile.

• Interview. Discuss where they currently live, have lived and also have them fill out a tenant application form where they'd fill in these details. During this time, you'd inform the potential tenants that you'd be conducting a background and credit check. You can perform these steps or have an intermediary company perform a resident screening. Have a written document with both the signatures of the tenant and landlord, agreeing on the specific points to be checked. The applicant does have the right to privacy so your business plan may be to deny any applicants who aren't willing to have a background check performed.
• ID. Get at least two valid IDs. This way you can have confidence that this person is really who they say they are.
• Good Credit. To define good credit, you must also define bad credit. Do your potential tenants have timely payments for their credit cards or other debts? What is there credit score? Compare it to the average FICO score in your area, giving you a guideline. How many late payments are acceptable before it's an irresponsible red flag? No one wants a tenant who can't pay their bills or loans. This is the kind of information you'll want to gather and have certain rules already decided upon.
• Prior Evictions. Make a decision from the get-go if you'll accept those people who've already been evicted. Maybe once you don't worry, but two prior evictions is a deal breaker. Get references from prior landlords because if there was a specific problem, chances are you'll see it again.
• No History. So we don't want a criminal history, but what about no credit history? What age is reasonable to not have a credit history? What about new alien residents or those with no social security number? Maybe a guarantor or sponsor would be the solution, and if so, should they reside in the same state? These are all decisions we must make before we even start renting out.
• Income. Call the potential resident's employer and also get copies of recent pay stubs. Get a confirmation of his present employment, giving you knowledge if he's capable of paying rent. Find out all sources of income, whether through employment, trust funds etc.
• Bankruptcies. Is this a deal breaker? Or what if it occurred years ago? If a tenant does file bankruptcy during his tenancy with you, he/she could be staying at your property without paying the bill.
• Background Check of Cases Filed Against Applicant. Are there any complaints against this applicant? Is there a history of violence or serious violations? You want your other tenants to be safe also.

These steps are vital in protecting you, your other tenants and your pocket book. You can spend the time doing the needed research or you can have an intermediate company who specializes in this type of resident screening do the checking. Both ways pay off in the end. The choice is yours, but make sure you do make that choice and not leave it up to fate. Otherwise your tenant with the smooth chatter and polished shoes could be leaving you and his trash behind.