These nice ladies want to share a new apartment –>

This is different than the situation I described in my last blog post. That covered an existing tenant wanting to add a roommate to share the rent. And, of course, you will have situations when an existing tenant wants to add a roommate for romantic or family reasons. Both of those obviously present different issues.

However, roommate situations from the beginning of a lease present plenty of challenges of their own. You can avoid some of them by setting clear rules and having an appropriate legal arrangement. You will also do better with certain kinds of roommates than others. Note here that I’m not talking about married tenants who obviously (unless they are separated) will be sharing the apartment.

But generally, the best roommates will be those who have lived together before. These folks already know each other really well, and are unlikely to discover unpleasant things about each other that make one of the roomies move out early.

I don’t think you should spend any time at all figuring out how the roommates are going to share the apartment. For example, you don’t really care who uses which bedroom or how they figure out long distance charges. There are excellent Roommate Agreements, arranged strictly between the roommates, which they can find on the Internet.

The simplest arrangement might actually be to get a completely separate lease, with separate payments due, for each of the roommates. In this case, you are treating each roommate as a separate tenant.

One problem with this is that the tenants may earn very different incomes, so that one can afford all or half of the apartment, and the other cannot. Frankly, however, such disparities make for very temporary roommates. Unless they are in a romantic or family relationship, when one roommate depends on another for support, the arrangement almost never lasts.

Another problem is that if one of the tenants moves out, the remaining tenant or tenants still have valid leases. Suppose you have two separate leases, each calling for $450 per month. One of the roommate/tenants moves out. Now you are getting $450 per month, total, for a unit that should bring in $900. And you probably can’t do anything about it.

A better bet, I think is to have one lease, signed by all parties, with one rent payment they are collectively and individually liable for. This means that if you have three people in a unit with a lease for $900 per month, it is up to them to come up with the $900.

Using the one-lease arrangement, the remaining roommates or roommate still owe you the full rent. Realistically in that situation, you’re probably going to give the remaining tenants a chance to find a new roommate. However, this is not something to stress before anybody signs a lease! You want the new tenants to believe they have a financial stake in getting along – that way they will treat the commitment more seriously. And, of course, you may want to evict remaining roommates if one of the original two or three breaks the lease – it may be an opportunity to find new, better, or just better paying tenants.

If you do allow the remaining tenant to find a new roommate, you have two options. One is to have a new lease supersede the old one, but with the new names. Cancel the old arrangement, and create a new one, only if the tenants’ do not owe any rent for the current or previous months under the old lease.

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Tags: apartment, find roomate, housing, rent, renter, roomate, roommates, tenant

The first purchase of an apartment building can seem like an overwhelming endeavor for the buyer. There is a lot of information and terminology that is suddenly thrust upon the first time investor and chances are that the new investor doesn’t have the knowledge base to accurately sift through the information to obtain and utilize the most important facets. For example, the new buyer may be staring blankly at the rent rolls for a twenty unit apartment building for the last two years and not have any idea how to dissect that information. Or the new investor may be looking at the income and operating expenses supplied by seller’s realtor and not be able to determine if the information supplied is accurate or even complete. Therefore it is wise to follow a few easy steps before actually purchasing an apartment building, of any size, as an investment.

1) Get an Education — It is necessary for the first time apartment buyer to get the best education possible before actually making the first purchase to make sure that he or she understands exactly what they are entering into and to be sure that they are prepared for any challenges that may arise. The education of the first time apartment buyer should include both an academic and a real world, experiential, component. The academic education should consist of reading as many books as possible about the subject in order to learn the technical terminology and to learn how to do simple financial analysis that will allow the investor to make intelligent comparisons between different properties. The real world component should consist of talking to and meeting with as many other commercial property owners and investors as possible. This can be accomplished by joining real estate investment clubs and meeting commercial realtors

2) Find a Qualified Commercial Realtor — While finding a commercial realtor is not an absolute necessity for finding a great apartment building investment many commercial realtors may know about sellers who don’t actively list their apartment buildings on the market for sale but are anxious to sell none the less. It may also help the first time buyer to have a realtor that will represent him or her when it comes time to make an actual offer.

3) Start Comparing Apartment Building Properties — One mistake that I see novice apartment building investors make, time and time again, is that they let their emotions rule over clear analytical thinking. Because many apartment buildings for sale are priced beyond their ability to be profitable it is important for the first time investor to carefully compare the investment returns offered by one building to many others that he or she has examined to find the one that is the best fit.

4) Find Apartment Building Financing — There are many different methods to obtain financing for an apartment building investment. Some of them include traditional bank financing, hard money loans, a limited liability partnership and owner financing. Each deal will hinge upon the kind and availability of financing for that particular property.

Tags: apartment, apartment building investing, apartment investing, buy apartment building, Commercial Real Estate, how to buy apartment building, landlord, real estate

The volatile residential real estate market that is currently affecting thousands of homeowners across the country will undoubtedly force many people to postpone their dream of homeownership and settle for life as a tenant in a rental property.

As more and more individuals and families enter into short and long-term leases, it is essential for them to have a basic understanding of the function and permissible use of security deposits.

The basic purpose of a security deposit is to give the landlord some level of protection against excessive wear-and-tear of the property by a tenant. Over the years, many landlords have often charged tenants a disproportionate amount of security upon signing the lease or have misappropriated or misapplied the funds in violation of the law. If you are going to enter into a residential lease, it is imperative that you understand your rights with respect to the security deposit funds you give the landlord.

Many states restrict the amount of security that a landlord may obtain from a tenant. In New Jersey, for example, a landlord may not seek in excess of one and one-half times the regular monthly rent payment as security. Landlords are typically required to deposit the security in an interest bearing account. In New Jersey, the landlord is required to either pay the interest each year directly to the tenant or apply the interest to pay part of the tenant’s rent that is due.

Further, the landlord must disclose via written notice the following:

1. The name of the bank where the security is deposited
2. The address of the bank
3. The type of account in which the security has been placed (i.e. money-market account)
4. The amount of interest the account pays. This notice usually must be provided to the tenant within a set amount of time, such as thirty days, from the date the landlord receives the security. Most states also require that the tenant be given notice when the security deposit is transferred from one landlord to another (upon the sale of the property) or if the landlord moves the security from one financial institution to another.

In most state statutes, the tenant’s rights are spelled out in the event that a landlord does not handle the security according to law. For example, a tenant may be able to pay past or future rent from the security deposit if the landlord has failed to pay the yearly interest to the tenant or has not given the tenant proper notice about the particulars of the security deposit.

Also, some states forbid the landlord from taking any money from the security to pay for repairs or rent due while the tenant still lives in the property. Landlords are also restricted in collecting additional security from a tenant at the same time that the landlord increases rent.

The most important issue to most tenants is how to retrieve the security deposit upon the expiration of the lease-term. Again, looking to the law in your state should provide the method and time frame for obtaining the security deposit from the landlord. Typically, a landlord must return the security deposit within thirty days of a tenant vacating the property less any charges for unpaid rent and damages to the property. The landlord is obligated to provided a complete list of the damages he/she claims and the estimated cost of repairs in writing and sent via certified mail.

The landlord can only charge for property damage that exceeds ordinary wear and tear. Examples of normal wear and tear are faded paint, window cracks caused by weather and leaky faucets. Also, the landlord can’t deduct a cleaning fee from the security provided the tenant leaves the property in broom-clean condition. Beware of landlords who try to deduct cleaning fees and painting fees from your security deposit!

To protect yourself, have the landlord inspect the property before moving out. Have the landlord sign a note indicating that the premises are clean and undamaged. Finally, take pictures of the property before vacating the premises. Remember–the security deposit is YOUR MONEY. So, make sure you do what is necessary to get it back from the landlord…with interest!

Tags: apartment, apartment security deposit, landlord, real estate, rental, rental security deposit, security deposit

We went surfing through Digg to find the most popular real estate stories from the last year. Here are the 14 coolest real estate stories that we could find among the masses of submissions:

1. The next real estate boom
   ” Picture the scene: it’s 2025, and you and your family are living in a beautiful, leafy-green village that seems more 19th century than 21st, even though it has only been in existence for ten years and is just 20 miles from a major American city.”
2. Photos of 100 Rooms, each 100 Square Feet in Size in Hong Kong Public Housing
   This photo-montage of 100 tiny apartment rooms was a very popular topic.
3. Super Tree Houses
   Check out the coolest tree houses you’ll ever see!
4. The 7 Coolest Web 2.0 Real Estate Sites
   We picked the 7 coolest real estate web 2.0 sites back in April. Low and behold, this was to become one popular post.
5. Craigslist to charge fees for real estate listings
   This strategy, which has taken place in selected cities, must have brought a ton of cash to the Craigslist crew and Craig Newmark.
6. The End for 6% Realtors?
   With the advent of new companies like Redfin and great new technologies, will full price real estate agents kick the bucket?
7. For the first time in the U.S., asking price for a house tops $100 million
   Donald Trump’s $125 million Palm Beach home broke the $100 million barrier for the first time in US history. Ironically, the price was soon thereafter Trumped!
8. The Greenest Office in America
   Adobe has turned its headquarters into a towering example of environmentalism - and is saving millions of dollars in the process.
9. 3 Million Bees Removed From Kitchen Of Couple’s Apartment
   A south Florida couple was happy to not be sharing their home with millions of bees. Jesus Molina said he and his girlfriend were ready to buzz off after a swarm of bees invaded the kitchen wall of their Miami Beach apartment. (video)
10. Dubai Dominates Global Architecture with Tallest Building and More
    Dubai, located in the United Arab Emirates (UAE) has been at the forefront of global architecture and is in the process of building the world’s tallest building, amongst other things.
11. Green Buildings are all the rage in New York City
    “They are not yet as ubiquitous as the Toyota Prius, the hybrid car popular among the ecologically minded, but “green” apartment buildings have begun popping up around Manhattan.”
12. The World’s Smallest Apartment
    Imagine living in the world’s smallest apartment. . . this thing is tiny! (photo)
13. 15 Common Renter’s Rights
    “You don’t have to be expert in landlord-tenant law to protect yourself. Just brush up on your rights — and read your lease before signing the dotted line.”
14. Tenant Leaves Behind 70,000 Beer Cans
    Imagine walking in on your apartment after your tenant moves out and finding 70,000 cans! (photo)

Tags: apartment, biggerpockets, building, cool, craigslist, digg, Donald, dubai, estate, future, green, landlord, popular, real, redfin, stories, tallest, Trump

Looking to send your tenants a signal that you’re partially human? With the holiday season in full effect, now is a perfect time to get into your renter’s good graces.

Here are a few ideas to let your tenants know that you’re not so bad this holiday season:

• Send out Season’s Greetings Cards
  The cost is minimal and the benefit is outstanding. A simple card can go a long way towards tenant loyalty.
• Decorate your Property for the Holidays
  Keeping things festive always puts a smile on your tenant’s faces.
• Throw a Holiday Party
  This works better for larger buildings (I’d guess 4+ units). Mingling with your tenants under a different set of circumstancess will help them to look at you in a different light. The holiday party is a nice perk that can go a long way towards tenant happiness.
• Upgrade Your Apartments
  We’ve talked in the past about using incentives or gifts to attract tenants. The holiday season is the perfect time to do a few upgrades on your units. Even simple things like new hardware, doorknobs, etc. let your tenants know you care.

Remember, a happy tenant is often a long-term tenant. Find some way to thank them and show your appreciation!

Tags: apartment, happy, holiday, landlord, rent, rental, renter, tenant