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So what rights do landlords have in Cleveland?

Usually when we think about landlord and tenant rights, we think about how the law seems a little bit skewed towards tenants over landlords. This turns out to be especially true when speaking about giving tenants the benefit of doubt, and at times even extra rights outside what is outlined in the law, by a judge in certain situations. But where exactly do landlords stand in all of this? Let’s talk a little bit about the most important rights landlords possess at the time of being in a lease agreement with a tenant.

1.- You can ask for as much as you want.

It’s important that you know what you’re entitled to as a landlord, according to the law.

As a landlord, you are entitled to ask for as much money for your property as you want. This is something completely permitted by the law, and you can go as low or high as you desire. However, it’s not wise to go way too high or way too low – we will provide you with advice in regard to this, usually leaning to asking for more at the beginning, and then work it out with the tenant from that. As well as paying mind to market feedback in order to help you decide on a good starting price. Remember you CAN ASK for as much as you want, but you CAN’T FORCE anyone to pay as much as you want. So, sometimes it boils down to negotiating in good terms.

2.-You can set your own terms for the lease agreement

When entering into a lease agreement with a tenant, you have the right to set your own terms for the use of your property AS LONG AS they don’t enter into conflict with what is stipulated by the law. It’s also really important for you not to violate any of the anti-discrimination statutes that the law stablishes (which are ever expanding in different ways from state to state). One way to avoid falling into this when evaluating for possible tenants is to keep your focus on non-subjective aspects, and making your case from them, such as credit history, when trying to filter out potential tenants that have a heavy criminal record for example. You also need to keep in mind that the type of tenants your property will bring in will definitely depend on its level of attractiveness. When helping you find a tenant, we have a very specific screening process that we follow, designed to take all of this into consideration so we can help you find the best option.

3.- You can evict tenants for non-payment of rent and sometimes non-money related situations

The law states that if a tenant does not pay rent, he/she can be subject to eviction by their landlord. It is really important to pay mind to other types of payment besides the official rent amount when considering this option. For example, utility bills can be considered as a form of rent. If tenants are obligated to pay for these according to the lease agreement, their non-payment can be used as cause for eviction. This holds up even if the lease contract has been renewed or still has a longer period of time remaining before it ends. In our case, one of our lease clauses specifically states that non-payment of utilities is considered non-payment of rent and this can be cause of eviction if neglected.

At the same time, if the tenant enters into a violation that materially affects health and safety, you must give the tenant a 30-day window of time along with a notice, to resolve this issue. After this time has passed you can file for the tenant’s eviction if the tenant has not resolved the violation, even if they have been paying rent on time.

4.- You have the right to access the property after a 24-hour notice.

As long as you provide your tenant with a 24-hour written notice, you can access the property for inspection or any other purpose that you as a landlord deem reasonable. This can be made in form of the postal service, or even e-mail. We recommend that along with the written notice, a call is placed in order to let the tenant know a notice has been sent, this way it’s impossible for them to claim to have missed reading the e-mail or the document in paper. It’s important as a landlord though, to avoid entering in any behaviour that could be considered intimidation – as this is not permitted by the law. This becomes even more important for delicate situations in which the relations with the tenant have already deteriorated for other reasons or when an eviction process has been set in place and there is tension between both parties.

You can also access the property without notice if you believe as a landlord that an emergency-type of situation exists (a gas or water leak), and proof needs to be presented in relation to this emergency, in order for it not to be a violation.

5.-  You have the right to get your property back in the state you delivered it to the tenant

This pretty much holds up for every aspect of the property EXCEPT for what we know as “ordinary wear and tear”. We will speak more thoroughly about this aspect on a different post, but it’s basically really unclearly defined by the law. In order to counter this ambiguity, we have a very detailed process in which we take photos and videos; then we present potential percentage values of responsibility for both tenant and landlord, and we keep these open for negotiation – usually starting high and leaning towards the landlord’s favor and negotiating from there while making value judgements.

Our aim is to keep this out of court, but if you do wish to take it there, it’s important to consider that if your claim as a landlord doesn’t hold up and you lose, you will end up paying double the value of the tenant’s security deposit -hence why we try to negotiate out of court and try to keep it reasonable for both parties.

6.- Other rights

Just by owning the property, you’re pretty much entitled to a whole bundle of other rights, and you transfer some of these to the tenant, when entering into a lease agreement. For example, as a landlord, you never transfer your rights to your property’s title and deed through the agreement. The only thing you transfer from yourself to the tenant is the right of access for the period to the lease. You keep this right to a certain extent, but as we mentioned before, there are limitations.

This is just one example of those additional rights, and we consider that it’s important for you to be familiar with at least the most important ones, but if you’d like to inform yourself on the details on the rest we offer you a link to the document “Tenant/Landlord Rights and Obligations”, this is a pamphlet provided by the Ohio Bar Association. The link is below.

What is a lease option and how do they work with Realty Trust Services?

A lease option can be an excellent option if you’re looking into purchasing a property in the near future, but you’re not quite sure at this point.

So you found a house you like that is offered as lease option. What exactly is a lease option? In simplest terms, it’s a way you can participate in home ownership if you’re not exactly ready to purchase a home. There are two parts to this:

An option, or purchase agreement, that allows you an extended time to purchase the house for an agreed upon price. At the same time, you’re getting a lease, so for that period of time, usually anywhere from 6 months to five years, you’re also living in that property and making monthly payments. In some ways, it’s the best of both worlds — you lock in a price and participate in home ownership — even if you’re not exactly ready to own a home.

Benefits include:

  • You are allowed to make some modifications to the property, a benefit which is not allowed in a normal lease. Of course any changes need to be of professional workmanship and approved by landlord.
  • Because you have locked in a purchase price, you benefit from any changes in property value due to inflation, market changes, and and your own improvements to the property.
  • You get to live in a property while you repair your credit or change your situation (i.e. say you are getting divorced and don’t want to own another house until that is completed). Nothing is more irritating than moving into a home you know you are going to move need to move out of again in just a bit.
  • Having that agreement to purchase gives you a kind of partial ownership known as “equitable ownership.”
  • With Realty Trust Services lease options there is a 90 day warranty on all repairs unless otherwise agreed to in writing. After that you are required and able to maintain the property yourself and don’t have to deal with the inconvenience of having to ask your landlord to do repairs and then open up the property at their convenience or that of their maintenance people.

The option fee which is the money you pay in order to have the right to purchase the property (an option agreement).The owner cannot sell the property once you’ve paid your option fee or and signed your option agreement. The option fee is not a security deposit and is non refundable so you want to make sure you will be able to complete your agreement. The option fee varies between 2 months rent and 10 percent of the total purchase price of the house and typically varies based on the condition of the house, the location of the house, the length of time of the option agreement and the corresponding rent amount. The option fee paid at beginning of agreement will be applied towards purchase as a down payment if tenant buyer chooses and is able to exercise their option to buy per their agreement.

There are potential opportunities to negotiate an option where some of the monthly lease payment is conditionally applied towards a future down payment if and when property is purchased. That is not a guaranteed term, but it can be included in the negotiations.

Overall lease options can be an excellent way to get the benefits of leasing and owning a home. However just like home ownership lease optioning a home is a significant agreement and you want to make sure to get any home you are leasing optioning checked out by a trusted professional before moving forward with an agreement.

Should I register my Cleveland OH property with the county and city?

Registering your property is one of the basic steps you need to deal with in order to get into doing business

Many people that want to begin investing in properties have a very common doubt right off the bat – Should I be registering my Cleveland property with the county and city? And how? This question is pretty understandable, since some new owners are not from Ohio, and some are actually trying to get into the game for the first time, so it’s our job to help you understand how the system works and what is the most convenient path for you.

The short answer is yes, you should register your property. It gets a little more complicated than that though. But let’s take it one step at a time. First, let’s refer to county level. You should definitely register your property with the county. It’s actually a misdemeanor if you don’t. It’s a really easy process, you only need to fill out a form and turn it in, and it’s free. We usually do this for our clients right away, even if they don’t ask us to do it, it’s pretty standard.

Municipality level is different. We take care of business in around 30 different municipalities, and around half of those require registration. Out of those, the cost to register a property varies a lot, ranging from $30 to $325. Then, the enforcement of this registration fee is different as well for each municipality; for example, some of them just make it work with the people that actually register, not trying to enforce it at all; some of them tell you that they will enforce it if you don’t register, but they don’t really have a staff to go after you. So basically, the cost of not doing it varies a lot depending on the municipality. Either way, we always recommend to comply with the law and register no matter which municipality your property is in, it’s the good thing to do, and you’re being a good citizen (regardless of its constitutionality).

Here are a few examples where registration might not be advisable:

The first example would be a situation in which you have just acquired a property, and it’s not registered; or maybe you have owned the property for a long time but never registered it. In the case that they never went after you for not registering check with counsel but it might not be in your best interest to register because: 1) They probably won’t go after you if they haven’t done it before; 2) Even if they caught you, the punitive fee that you would be incurring wouldn’t be much different than what it would be if you turned yourself in for not registering in the past. This type of situation means not registering will may place you in a better situation than trying to comply and actually getting you into trouble.

The second example is related to rental registration. In certain municipalities, in order to register your property for rental, they will freeze your ability to actually lease the property for about 15 days or so until it goes through. This means you’d be losing those days’ worth of rent. Renting the property within that period of time, would incur a violation fee which could be a minor amount in comparison to the extra rent. In this case you might choose to go ahead and rent your property and violation fee.

Whether you should register your property depends entirely on the specific context and your own comfort level however with our clients we always confirm registration by default and register your properties if they are not registered already with the appropriate municipalities.

What should the LLC that holds my property be filed as?

I’d like to give you some information about corporate entity strategy in order for you to be able to better protect your assets. Even if you find this information useful, remember to always consult your attorney and your certified public accountant before you make any important decisions.

Choosing the right entity for your property can help you add an extra layer of protection to your assets and reduce expenses.

Let’s begin with taxes. Here at RTS we issue 1099s as required for most of our owners based on gross income received by us, when it is received by us. Your money comes directly to us, and when it does, IRS considers that money is becoming yours at that point. So, it’s not the net income you receive after it owner pay out, it’s the gross income we receive in your name. After we receive it, you can use our statements and deduct any expenses off your taxes from that 1099.

If you have a property that is in an LLC, you have certain level of choice in regard to the way you file it. This means you can basically choose how your LLC will be looked at by the IRS. You can file you LLC as a S corporation, C corporation, or a pass-through sole proprietorship. This means that the LLC lets all income and expenses pass through directly to the owning entity, whether it’s a person or another corporation.

Usually, if you have several properties, each with their own special LLCs we recommend to take them and turn them into sole proprietorships, passing all of the income and expenses directly to the owning entity. This allows you to reduce accounting expenses, since you will be doing fewer filings and movements for these properties. This is in general terms what we’ve seen most of our clients that own several properties do (as well as myself), but there could be other advantages or disadvantages related to doing this, depending on the amount of money and context that are being taken into consideration. Either way, always check with your legal advisor and accountant in order to know what’s best for you.

How do you ensure that you find the best tenants for our property?

The key to maximizing profitability and minimizing risk as a landlord has a lot to do with choosing the right tenant. That starts with the marketing of the property, and the energy that can be produced off that. There are a few tricks to creating effective advertisements to help find the best tenants for your properties. You can advertise in the newspaper, on billboards, or on the Internet; however, you may be wasting your time and money advertising to people who either aren’t interested in what you have to offer or aren’t qualified to meet your criteria.

A good ad campaign lets you target and attract the kind of tenant you’re looking for. An advertisement works best when it’s appealing. So, before you decide what information to incorporate, think about what characteristics you value in a tenant. Here are some good examples:

Finding good tenants will, more often than not, prevent you from having to deal with a myriad of problems as a landlord.

· Stable employment

· Pays rent on time

· Has never been evicted or used a landlord as a revolving line of credit

Once you’ve identified characteristics you like in good tenants, think about what factors contribute to a good rental experience for landlord and tenant. What did you as the landlord have to offer your last tenant? Was the last tenant happy and satisfied? Assessing this information will help you decide how to focus on the marketing aspect for the property.

Often you will attract high risk tenants who use landlords as a revolving line of credit when advertising your rental property, so it is imperative that you attempt to identify these tenants immediately. Here at RTS, we have a very specific checklist process for screening tenants and filtering out bad elements for your property. Sometimes we even go as far as contacting up to two previous landlords for the potential tenant in order to verify their background. This can get tricky, since some landlords will lie in order to either keep their tenant (say they’re awful when they’re not) or lie in order to get them to leave (they will say they’re great when they’re not). This is why we have such a detailed process, and it will reduce the risk of you getting a bad tenant for a good property.

It’s important to note that, if the marketing aspect of the property is done right at the beginning, usually bad tenants will filter themselves out even before the screening begins. Rest assured though, that we will do our best to get you the best tenants we can find for you to do business with.

Did your property manager lie to you about value?

After years of experience in the industry I have learned that it’s a really common practice for many real estate agents to not only mis-value properties during their first encounter with the owner, but also declare a fixed price for it, in hopes of trying to get your business. This goes for both rental price evaluation and sales price evaluation.  You would think that, since they are professionals, they probably know about this and have the expertise needed to place a price on your home or apartment with one look. Well you would be wrong.

One very important thing to remember is that value is not a synonym of price. In general terms, the word price represents the amount of money that is asked for in order to purchase a certain something. Pretty basic right? That’s when value comes in. Value represents the actual benefit you are gaining by paying a price at the time you make a purchase. Value is that extra space you would love to have in your bedroom for a triple dresser. Or those extra square feet you need in your backyard for the vegetable garden you want to grow. Or a good view of the beach from the second floor.

And this is why stating that your property is worth a fixed amount and can only go for a certain price is plain wrong. It is wrong because even when an expert is able to assess the approximate worth of a property based its characteristics and recent history, a whole set of additional circumstances go along with that into actually defining the end value of the same property for individual potential buyers.

Maybe there’s a very specific circumstance in relation to the neighborhood surrounding the property that will give one buyer a less attractive standpoint in regards to the value of the property while at the same time, another person will actually offer an additional premium due to the fact that its really close to their workplace. In the second case, as this happens, and this new offer appears due to a single need met by this specific property, the market value begins to vary. This is basic supply and demand going into action.

Being lied to about the value of your business and finding out later can be a taxing experience.

For this same reason, when stating a property’s potential worth, it’s common practice to use ranges when speaking about actual pricing. This way agents take into account a variation of value that a set of different additional circumstances offer, as well as other changes in market behaviour that could very well affect the value of the property at any given time.

So, if you get to meet a new agent and he/she instantly states a fixed pricing for your property, always remember – they are either lying to you, or they have a crystal ball.

Should My Properties Be Owned as an LLC or Corporate Entity?

Please check with your CPA and Attorney for purposes of Legal Consequences and Tax Consequences. Coming from experience all properties should be set to companies, and the main reason for people not wanting to do so is because certain mortgages. From the asset protection standpoint it adds an extra layer of protection, and inexpensive. You can login to the Secretary of States website and pay a fee, and you receive the certificate. You can give this certificate to the local title company; this ensures an extra level of insurance. Another main reason is doing this step can protect you from being targeted personally. In regards to that this is not 100% protective as there is ways to pierce the Corporate veil.

An example is if you own ten properties and someone injures themselves on one of your properties and wants to hold you personally accountable for the situation the attorney who is hired to assess the situation will research the owner of the properties. In which seeing they (you) are covered will avoid making this more of a dangerous situation.

Our experienced investment property management team can relieve you of the burden of managing your rental property while saving you some serious money! Call us today at (440) 220-7300 to see how we can help you!

Cleveland Ohio landlords have flexibility to sell, rent, or lease option

We can rent out your house while helping you sell it.

Many Cleveland Ohio landlords do not set out to be landlords. In many cases, the property owner needs to move out of the area for work or family reasons and doesn’t have enough time to sell their house before they need to leave. In those cases, many people turn to renting to cover costs. Or depending on the market, they decide to rent until the value of the the home increases.

In these situations, there are options, and we can help with all of them. You can continue renting the property and use a property manager to handle the day-to-day for you. We can help make arrangements to sell the property. The property can be marketed for sale while also rented. That way the rent is covering costs, while the house is still on the market. Learn more reading Help! I’ve been transferred out of state but can’t sell my home.

The third option that you may not know about is a lease option. This is a combination of renting and selling. In a lease option, the renters lease the property with the intent to buy after a predetermined period of time.Many Cleveland Ohio landlords understand the risks and difficulties of the market. Regardless of whether you decide to keep the property as a rental or sell it to get out of the rental business, we understand, and we can help.

Our experienced investment property management team can relieve you of the burden of managing your rental property while saving you some serious money! Call us today at (440) 220-7300 to see how we can help you!

 

5 problems with Cleveland Oh property management

These are the 5 most common problems with property management in Cleveland, Ohio.

Property management is a difficult industry in Cleveland Oh. We are often the messengers of bad news. Renting is difficult and expenses vary by zip code throughout the Cleveland Oh area. Property management is also a very young industry in the Cleveland area. Only a small percentage of Cleveland landlords currently use a property management company. Of the top five companies in the area, the oldest is only seven years old.

Due to the newness of the industry here in Cleveland, there are some problems that property owners need to be aware of before hiring a property manager. Here are the top 5 problems with Cleveland, Ohio property management.

  1. Lack of accountability. Unless you are following your property manager around making sure they are doing what they say they are doing, there is no way to know for sure. This creates an overall lack of accountability. We work to eliminate that with our property owners through the use of surveys, photos, videos, and inspections, as  well as provide regular reports and statements, as well as inspection services. We take the extra step to demonstrate accountability.
  2. Lack of fiduciary. All property managers are supposed to be licensed, but that is often not what you will find. Fiduciary care to all clients is sadly not happening. In many cases, it is someone who owns some properties and decides it would be easy enough to also manage other properties. However, they are not giving the same level of care to all properties. We use systems to make sure all properties are getting the same level of care. Our landlords also have dedicated representatives that act as their direct point of contact.
  3. Lack of license. I said earlier that many people offering management services in the area are doing it without a license. A quick check of Craigslist will verify that for you. Managing properties without a license is highly illegal.  If caught the individual will be charged with a misdemeanor and receive a fine of $1,000 per incident, which adds up quickly. This can lead to you losing a lot of money. Not to mention, working without a license is not professional and does not offer accountability or fiduciary responsibility.
  4. Lack of communication. This is a common problem between property managers and landlords because the management company has not created a system to monitor and encourage communication. We guarantee your dedicated representative will respond to calls by the end of business on the following day. We believe the more communication the better.
  5. No real process. Those new to the business quickly realize that without solid systems in place to manage every aspect of property management, things get out of hand quickly. This is a very complicated industry. The bigger the company gets, the more difficult it becomes.We deliver peace of mind through our systems. We utilize management software, maintenance software, project management software and more to ensure everything runs smoothly and efficiently for everyone.

We are always looking at our current processes to determine if there is something more or better we can be doing. If you have any suggestions or feedback, we are always happy to hear. If you are a property owner in Cleveland Oh, feel free to contact us with any questions.

Our experienced investment property management team can relieve you of the burden of managing your rental property while saving you some serious money! Call us today at (440) 220-7300 to see how we can help you!

 

 

Should I have someone manage my rental properties?

rental properties

Investment property comes with unavoidable risk.

This is a question I hear a lot. People want to know if they should manage their rental properties themselves or hire a property manager. In order to answer that question, I have a couple questions for you.

Do you have real estate experience and can you handle high stress situations? Managing rental properties is a stressful job. Are you the kind of person that can stay calm and level-headed in a stressful situation? Can you manage emergencies calmly? Can you keep your cool when someone is trying your patience? These are some of the attributes you need to deal with tenants on a day-to-day basis.

Tenants bring drama and have ways of attempting to control the situation. They may call in the middle of the night or make constant demands. They may try to guilt you into accepting their excuses for not paying rent or for making concessions you wouldn’t normally agree to. Can you deal with these emotions? A manager will insulate you from possible mental and emotional abuse.

Having  a manager helps with these emotions by dealing with the tenants directly. Managers create a buffer between you and the chaos. However, there are some emotions a manager can not help alleviate.

Can you handle the emotions that come with risk and property ownership?  A manager can help deal with the tenants but they cannot take out the risks involved. This is addressed in Should I be a Landlord? There will always be risk in owning rental properties. Things happen. Bad tenants happen. Property damage happens. natural disasters happen. As property managers we work to decrease many of the risks, but we cannot promise they will never happen. You have to be able to deal with the risks that come along with owning rentals.

Do you have the time to manage your properties?  We take care of the day-to-day needs allowing you to use your time in other ways. We have several successful systems in place that allow us to manage a multitude of properties seamlessly.

Are you a control freak? We see this a lot with landlords that have been in the business for years and have been managing their own properties. They want us to do everything their way, but that won’t work for us. Our systems work and to try to manage different properties using different systems or procedures would be hectic and take way too much time. When landlords decide to work with us, they need to take that leap of faith and allow us to manage them our way using our systems. If this is something you can not let go of, you may be better offer hiring an employee to help you with the day-to-day work instead of hiring a property manager.

Our experienced investment property management team can relieve you of the burden of managing your rental property while saving you some serious money! Call us today at (440) 220-7300 to see how we can help you!

 

 

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