Four Steps to Simple Online Rent Payments

Four Steps to Online Rent Payments

It is true that property managers are more concerned with their day-to-day duties and less concerned with implementing new solutions for collecting rent online. To many property managers, online payments seem complicated; they will say “I’d need to setup a merchant account for my business, market the offering to my tenants, and then answer all kinds of questions to tenants. And many of my tenants don’t pay with checks! Basically, it’s just another thing to worry about.”

This popular sentiment is simply wrong. We believe it can all be summarized in four simple steps.

Setup and Support

Supporting you and your tenants should not be a chore. Let your payments vendor do that work. This means providing you with clean templates to help you notify and market this new payment program to your tenants. Also, your payments vendor should be willing to get on the phone with you and your tenants to help them get comfortable.

Provide Payment Options

Not all tenants pay the same way. Not all late fees are the same. Your online rent payments vendor should provide you the flexibility you need to receive rents how your tenants like to pay: cash, check, debit, or credit. (Yes, cash can be processed through an online rent payments platform). Your vendor should also provide options for you to customize and automate late fees. You deserve options and should demand them from your vendor! If the vendor you are considering doesn’t have what you are looking for, don’t be afraid to ask – the feature could be on their roadmap.

Seamless Brand Integration

Are you concerned that your tenants will be confused if they rent form the “The Oaks” but then they need to go to some other random site to pay rent? This can get confusing for some tenants. Ask your vendor if they integrate their payment solution into your website so you can keep the branding experience for your tenants as seamless as possible.

Ongoing Training

Your vendor cannot forget to support the ongoing questions and needs of your tenants. Questions will come up and who will be around to answer them? You don’t want them, do you? Can you or your tenants get a real person on the phone?  Solid communications are necessary to keep your customers happy.

Online rent payments result in significant time savings for you and your tenants. It distinguishes your property from your competition, which is certainly a consideration factor for both current and prospective tenants. And let’s be honest, today, most tenants would rather pay online!

Tips For Drafting a Lease

Writing Pencil

Completely clueless when it comes to drafting a lease? Don’t be! With our guide, you’ll have a clear and concise lease in no time.  Remember—states’ laws differ greatly, so be sure and check on your local laws. What is legal in one state could be unconscionable in another.

A “strong” lease:

It is a known fact that courts will refuse to enforce agreements that are made in bad faith, meaning that the lease terms are outrageous and unreasonable. Furthermore, a lease should be strong, but not so restrictive that it will be held invalid by the court. Each state is different in regards to documenting a lease, so it is recommended to check your state’s regulations prior to drafting your agreement.

What is a severability clause?:

Under the severability clause, the terms of the contract are independent.  Therefore, if just one term in the contract is seen as unenforceable, the contract as a whole cannot be deemed unenforceable (this can come in handy).  Make sure to include this clause, or else your entire lease could be impossible to implement!

Security deposit:

It is important to include the amount of the security deposit in the lease, otherwise it can be difficult (or impossible) to impose later. Additionally, if you do not collect the security deposit because you “trust their character” or some other reason, the tenant could start to take advantage of the situation and fail to pay rent, damage the property, or some other unfortunate consequence.

What should I include?:

Here are some of the articles that we believe would be beneficial to include in your lease. Keep in mind that this is not by any means the entire list, but will give you a good head start on the process. Furthermore, each point can differ depending on the state that the lease is drafted in, so keep that in mind:

  • Will you allow subletting?
  • Is there limit on the number of occupants and animals that are allowed to live on the property?
  • What is your state’s definition (and remedy) for default (when one party to the contract fails to fulfill the terms of the agreement)?
  • Who are the parties to the lease? (This is important for numerous reasons.  One example is that if two people, such as a couple, are renting a unit, then both signatures should be included on the lease, or else this could become a complication later on).
  • When is rent due? When is rent considered to be late?
  • What repairs are the responsibility of the landlord? What about the tenant?
  • What will happen if the tenant breaches the lease agreement?

Do you have any other important items to include while drafting a lease?

Are you receiving rent payments online yet?

Here we are, 2015. Are you stuck in a paper rut? Why? Trust issues? Tenants won’t do it? Too complicated? At RenterUp, we talk with hundreds of property managers and yes, we hear it all!

Let’s review several comments we hear from property managers about receiving rent payments online and comment on each.

  • Why? Cash flows and late payments! For my business, cash flows are critical; I pay my mortgages, utilities, and maintenance out of my cash flows, so I have to stay on top of it or I quickly dip into my savings. Also, I don’t like late fees – I’d rather have an on-time tenant than deal with fees that stress the relationship. That said, I do charge fees because I do not reward bad behavior, but I’d much rather avoid it. Since setting up my tenants with online rent payments through RenterUp, I have personally seen a 30% improvement in on-time payments. My favorite is my Atlanta tenant. She gets an automated email reminder 5 days before rent is due, clicks through the link on her phone, clicks “pay rent,” and boom, early rent! Early!
  • It’s too complicated for me. It is easier than you might think. We have gone to great lengths to make the setup process as painless as possible, from mobile or desktop, and we’ve developed a process that avoids the need for collecting too much personal data. For your safety, we have implemented an identification verification process, so our team will personally follow up with you by phone to verify your registration. We estimate 90 seconds for account setup and 90 seconds on the phone for verification. 3 minutes and we’re done. If you have a lot of properties you might want to import into RenterUp, just let us know and we’ll import them for you.
  • My tenants won’t do it. Really? You might be surprised at the response. We hear about tenants who are tired of writing checks, collecting cash, scrambling for money orders, and so much more. RenterUp is working to make it easier for tenants to pay, regardless of the tenants’ choice of tender – cash, check, or charge! Stay tuned for updates later in the month.

Top Legal Mistakes For Landlords to Avoid

Being a landlord can be tough, but at the same time very rewarding.  There are numerous things to keep in mind, but not all are self-explanatory.  To help direct you along the way, we’ve compiled a list of our top legal mistakes steer clear of, because a liability issue is probably the last thing you need on top of everything else. 

Do not be discriminatory. 

There is a difference between asking meaningful and discriminatory questions.  The Fair Housing Act of 1968 protects individuals from discrimination, particularly of race, color, religion, national origin, sex, disability, or presence of children, while renting, purchasing, or financing a home.  Therefore, we advise landlords to use unbiased tenant screening methods, such as questions about criminal record and credit score, in order to find the best tenants to fill your property. 

You must disclose all information about your property, whether you like it or not.  

Some common examples of disclosures include information on the installation and maintenance process of smoke detectors and alarms and the presence of environmental or health hazards on the property.  If you do not disclose important information, it will come up sooner or later, and tenants may be able to file a lawsuit against you.

Landlords are legally responsible to keep tenants safe from harm.  

This can be anywhere from installing full-fledged alarm systems to the removal of carbon monoxide.  If any tenant suffers from property or physical loss, he or she may be able to sue the landlord and recover compensation.  This can turn into a very expensive situation, and can also lead to complications in the (potential) eviction process.  

When creating the rental agreement, it is wise to specify whether the tenant or the landlord must make each type of repair.

 Each landlord has the responsibility to furnish a rental unit that is sufficient to live in, meaning that each rental unit must have heating, plumbing, and clean water, amongst other commodities.  If repairs are never made or if the landlord does not provide an acceptable place to live, this may result in a lawsuit against the landlord.

While the landlord does have responsibility to make frequent inspections of their property, this includes certain restrictions. 

The landlord must provide verbal or written 24-hour notice before entering a tenant’s rental unit, or else the tenant can sue the landlord for breaking and entering.  After providing notice, a landlord may enter the rental unit to inspect the property or make a repair.

Eviction is the removal of a tenant from a rental property by the landlord.

 A tenant may be evicted for a number of reasons, like if the tenant fails to pay rent by the due date specified, or if the rental property is being used for something other than its intended purpose.  The eviction process differs between states, but usually follows the same steps.  If the landlord tries to evict the tenant without a court order or notice (the first step of the eviction process), then the tenant may recover damages.

A tenant must pay a security deposit to cover damage that they have contributed to, which is specified in the rental agreement.  

The security deposit should only be used to cover damage that is on a list provided by the landlord and the landlord must pay the balance of the security deposit to the tenant once the process is completed. Unfortunately, some landlords use the security deposit for unnecessary refurbishing for the property, or keep it for their own personal use.  This can result in the tenant pursuing legal action against the landlord to reclaim the deposit.

Do not use generic lease forms.  

If you were to use a “standard” form to create a lease, it could be considered unenforceable, and it might even include greater obligations and restrictions than your own state’s laws. Also make sure to include everything necessary in your written lease so later on if there is an issue, it is clearly stated in writing.  Some important articles to include in a rental agreement would be the length of the tenancy, the amount of the security deposit, and the amount of the rent and when it is due each month.  

Landlords should consider purchasing a landlord insurance policy in order to protect themselves from financial loss.  

This particular policy includes coverage against household accidents or disasters such as fire and water damage.  Additionally, this policy covers all other important structures listed on the property, like swimming pools and garages.  This coverage also includes a landlord’s personal belongings that could be used by tenants, such as appliances and furniture.  Without this policy, the landlords could be unable to be fully compensated in the event of a loss.   

Don’t make a promise that you can’t keep, because it will come back to hurt you.  

For example, if you agree to replace your tenant’s broken refrigerator within two weeks, the tenant will most likely hold you to your word.  Thus, make sure that your promises aren’t unrealistic, and keep all of your promises in writing.  An unsatisfied tenant is able to legally break the lease and potentially sue the landlord for the difference between the value of what the tenant was promised and what was actually delivered.  

Top 3 Landlord Checklists: The Value of Process

Checklist
I admit it, I’m not the most organized person in the world. However, being an effective property manager or landlord is tricky for anyone lacking discipline, so during my years of managing rentals and talking with hundreds of property managers, I have learned to rely on a few checklists that help me keep my investments working effectively. My top three recommend checklists are:
  • Pre-Move-in check list: You can find decent lists online that are easy enough to customize for your own use, but my suggestion is you use your phone to record pictures and videos of the unit so you have evidence of the pre-existing conditions. Remember to ask your new tenant to sign the checklist before move in.
  • Quarterly or Bi-annual Inspection: This is a proactive process I like for a number of reasons. First, it allows you to be proactive about preventative maintenance issues that you may not have already heard about (think air filter replacements, potential plumbing issues, etc). Second, it helps you keep a closer eye on what’s really going on inside your unit (undocumented tenants, etc.) I recommend customizing your Move-in check list to accommodate these inspections so you have a point of reference throughout the life of the lease.
  • Move out walk thorough: When I get notice from a tenant they are vacating the home, I like to remind them of my expectations upon move out and set up a walkthrough. I print out my checklist with pictures and have my phone or iPad handy if there are any questions. Always get them to sign the move out checklist.
What processes or checklists do you use for your tenants?

Rising rents: an affordability issue or a profitability opportunity?     

Housing affordability is a real thing. A very real thing. It’s hard to buy a home today…..so you rent. Right? Well, markets do what markets do and the rental marketing is rising…with no end currently in sight.

The Wall Street Journal reported on January 6, 2016 (article here) that US rents in 2015 rose 4.6% to $1,179 – an unbelievable 22.3% increase since 2009’s average rents of $964. Over 22%!!!

Affordability is the issue and there is no clear solution – unless real estate developers overbuild again. Let’s not hope for that to happen again. Please, no.

Then, as a landlord, I see profitability. Yes, my rents have been increasing to meet market prices, so my investments are certainly more secure – I am happier!

What are you thinking about? Affordability or profitability? I am in the profitability camp, myself.

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Shifting the narrative.

Last night we demoed RenterUp to a full-house crowd of about 400 people at Atlanta Startup Village. We had 5 minutes to introduce ourselves and walk through our product – it is a lot of ground to cover in a short period of time. After the demo, we were given 5 minutes for Q&A from the audience…..this could have gone on for half an hour. The net result is that RenterUp has shifted its narrative. Not a “pivot,” but shift.  What does that mean?

We always said we were wanting feedback and we were listening. We were. We listened to people who signed up for RenterUp and did nothing, we listened to landlords who have since transacted several thousands of dollars of rent, and we listened to the landlords and property managers we want as our future clients. We pay attention to comments about usability, functionality, experience, user-flow, etc., but we really pay attention to comments about pain.  Pain that requires more than a vitamin, it requires a solution.

For example, we heard many property managers say, “your platform is great, but my tenants pay in cash. Cash is messy, it disappears (true story), and is truly inconvenient.” We investigated this problem and discovered indeed, a lot of cash is used to pay rent. How can we develop a solution with cash as the payment method? Then, we heard a multitude of property managers tell us their biggest fear is a vacant unit. They would ask, “Can I accept applications for a vacant property before I ever have to meet the applicant?” or “I charge $40 per application because it costs me that much in time and labor to process and filter through the applications. How can I automate this?” This became a recurring theme: collections and applications.

As we dove into these real pains, we began to see narrative develop. A narrative we could rally behind.

In 2015, RenterUp will be offering a rental management solution to solve three pain points for busy property managers. First, RenterUp will allow tenants the ability to pay rent in a variety ways: credit, eCheck, and even rent payments by cash transacted in the register line of tens-of-thousands of big box retailers across the United States. Next, we will provide a centralized method for

Gimme Shelter! Five Tax Deductions for Property Owners

GimmeShelter

Happy Tax Day! Are you looking for deductions, tax shelters, tax havens, any kind of tax relief? I certainly am….

Guess what? Rental properties are ripe with tax deductions to help relieve you of your annual tax burden. I am not an accountant but I do have my favorite deductions which provide low-hanging fruit-rationale for considering a rental property investment. My top five tax deductions are:

Depreciation

Your rental home, condo, or apartment building cannot be written off all in the year you purchased it; the IRS considers it to be long-term property. Technically, any item that lasts more than one year is considered to be a capital asset and therefore, long-term property. Examples of this are everywhere in a property: the building itself, the roof, the carpet, refrigerator, and on and on. Because these capital assets last more than one year, they are subject to depreciation, which is a process of writing off the asset every year over the general useful life of that particular asset. It is not complicated, but honestly, this can get pretty in-depth depending on how far you or your account might be willing to take it.

Depreciation starts with the property’s basis (what it’s worth today) and an IRS-mandated recovery period for the capital asset. For a building or home, the recovery period is 27.5 years and for capital assets, such as refrigerators, carpet, or roofs, the recovery period can vary from 5-27.5 years. So, in its simplest form, if the value of the building (not the land value) is $100,000 then every year, for the next 27 years, you can depreciate $3,636.36 ($100,000/27.5 years). Let’s say your rental home needs a new refrigerator. Generally (using the general method in accounting parlance), you can depreciate that refrigerator over 5 years. So your $500 refrigerator can be depreciated annually for $100 over the next five years ($500/5 years). Therefore, you are now depreciating $3,736.36 because of the building’s plus the refrigerator’s depreciation.

The rub to depreciation is called recapture. What you depreciate today needs to be recaptured by the IRS when you sell. So, using the example above, if you own the rental home for ten years and have depreciated $3,636.36 every year (let’s forget about the refrigerator or any other capital assets), then you have depreciated a total of $36,3636.00. If you purchased the rental home in 2005 for $150,000 and you sell it in 2015 for $250,000, you think you have $100,000 of profit that should be taxable. Not so fast……because of the depreciation you applied during those ten years, your taxable amount is now $136,363 because you sold for a $100,000 profit and you must recapture the $36,363. Recapture only exists for capital assets that have been following a depreciation schedule.

As you can see above, this can get quite hairy. It’s probably best you hire a solid accountant to help you manage and keep track of the complicated depreciation schedules that accrue. Regardless of the perceived complexity, it all adds up and provides a nice tax benefit for property ownership.

Interest

This is a big one – probably your biggest deduction. Basically, you can deduct any interest paid that you or your business accrues from 1) the purchase of a property through a personal loan or mortgage, 2) property improvements made from a personal loan or mortgage, or even 3) any general business services or products pertaining to your rental business, even if paid for with a credit card.

This is easier to calculate than depreciation but may require more documentation to back it up. Mortgage companies will provide you with a Form 1098 which will show how much interest was paid during a particular year. It is important to note that the principal payments do not qualify to be deducted – only the interest portion can be deducted. Instead, the principal amount typically gets added to the property’s basis. For example, if you were getting a $20,000 second loan to pay for a kitchen renovation, then the $20,000 would add to the property’s basis and follow it’s respective deprecation schedule, but any interest payments made during the life of the $20,000 loan can be deducted.

Again, it all adds up and interest is usually the largest deduction for most property owners.

General Repairs

Your home or building will require repairs and maintenance, all of which is deductible. This can be anything from a plumbing bill for a leaky sink to weekly lawn maintenance. The only place this gets tricky is when you add a capital asset to the repair, assuming you replace the faucet to repair the leak. The faucet can be put on a depreciation schedule while the general repair can be deducted.

Travel

Any travel activity pertaining to your rental business can be deducted – normally trips to your property or to the hardware store, etc. The deduction for this kind of local travel falls into one of two methods (not both!):

  • Depreciating your vehicle and expensing gas, repairs, etc. This generally works well for “company cars” that are used primarily for the purposes of supporting your rental business. Depreciation schedules vary based on the type of car, SUV, or truck you buy, so it’s worth looking into it for your particular vehicle.
  • Deducting mileage based on today’s standard mileage rate. This works well when you use your personal vehicle for the purposes of supporting your rental business. The mileage from any trips to your property, the hardware store, etc get added up and applied to the current mileage rate for reimbursement to you from the company; then, that reimbursement gets applied as a deductible expense.

Long distance travel that applies to your rental business also applies, including airfare, meals, hotels, car rentals, etc. It is very important that you document every receipt and every mile during your travel for your records. I highly recommend a simple application called Expensify to help manage all receipts digitally – I never deal with paper receipts…..ever.

Home Office

If you have an office at your home and meet certain IRS requirements, you can deduct a certain portion of your home’s expenses for your home office. In my honest opinion, this one gets complicated and it further complicates things if you also own your personal home and are looking to take advantage of your capital gain benefits from your personal home. If you deduct your home office, you erode your cost basis on your personal home and may get you outside of your capital gain tax-free benefit. Again, talk with your accountant about this one.

Tax benefits are a great reason to invest in real estate and hopefully these five deductions can help you consider an investment property as you consider you next tax day.

Happy renting!

You MUST pay rent online!

I-Want-You-Pay-Rent-OnlineObviously, the RenterUp team is passionate about paying rent online. To us, it simplifies everything for both the tenant and the property manager. For the tenants, no more digging for checks, envelopes, and stamps. The value for property managers is even greater: there are no more checks, cash, or money orders to be lost or stolen; there are no more costly trips to the bank; and, honestly, manually reconciling rent payments is a tremendous time killer.

We believe everyone should pay rent online; we do not believe everyone must pay rent online.

I recently stumbled upon a story from July 2014, by Lindsay Bramsom at KXAN, an Austin-based NBC affiliate station, describing how an apartment complex in Austin was forcing their tenants to pay rent online. Forcing them. (View or read Lindsay’s piece here: http://snip.ly/aGKc)

Forcing tenants to pay rent online is bad business. I manage seven units and have personally seen the challenges many of my tenants have with online payments: some don’t have email accounts, some don’t have checking accounts, and many don’t do well with online accounts (“I can’t remember my password” and “I don’t have internet” are the two reasons we often hear).

At RenterUp, we believe that providing rental payment options to tenants is good business. Next week we will officially announce our newest product to support the needs of cash-paying tenants, like many of those in Lindsay’s story. Our product, called Paper-or-Plastic, will allow tenants to pay rent directly in the registers of normal check-out lanes at any of tens-of-thousands of nationally recognized big-box retailers. More details will be available next week.

The point is that property managers and apartment complexes would do well to provide more payment options rather than imposing payment types. Providing more payment options illustrates goodwill and understanding that everyone’s needs are different.

We believe everyone should pay rent online, but we don’t believe that should be so limiting – we believe online can mean rental payments via cash, money order, check, or credit card.

 

5 Simple Steps to migrating from SparkRent to RenterUp

 

renterup_sparkrent_closingChange is never fun. It’s especially not fun when it involves changing your ability to receive rent payments. Since SparkRent’s recent announcement, we have received hundreds of calls and emails about our features, capabilities, and the work involved to migrating to RenterUp. I thought it best to distill it down to 5 easy steps, which take about 120 seconds for your first property and about 60 seconds for each additional unit. To migrate from SparkRent to RenterUp, you must:

  • Sign up for RenterUp. Start off by adding property information for all of your rental units.
  • Add rent rules and late fees. You want to collect rent, right?
  • Add tenants to each rental property. If you’d like, you can customize a personal email to each tenant to guide them through their account setup. If you rather send a pre-canned email, we have that ready for you as well.
  • Add your bank account information. We do need to know where your rent should be delivered! For security purposes, we will need to verify your identity.
  • Relax! RenterUp has all reminders and notifications covered.

Your tenants will receive your email about RenterUp and click through a link in that email to quickly set up their account. They will add their bank account information and verify ownership of that account to be ready for all future payments. When rent is due, they simply click “Pay Rent” in RenterUp and it’s done.

You can learn a little more HERE, or if you have questions or concerns about migrating from SparkRent to RenterUp, please don’t hesitate to call or email us. We can talk you through it!