Renters Insurance - You're unprotected without it

While homeowner's insurance is almost an assumption for anyone buying a home and auto insurance is mandated by law, renter's have never sought insurance protection in large numbers. Studies have shown that as few as 40 percent of all tenants are covered by renter's insurance. With tenancy rates once again on the rise, now is a good time to examine the benefits of renter's insurance.  At Rental Home KC, we feel renter's insurance is so important that all of the leases we write now require this insurance and proof of coverage.   Why Consider Renter's Insurance? Many renters know little about renter's insurance, from cost to coverage. Here are a few of the reasons to consider buying a renter's insurance policy. You're unprotected without it- Tenants often make the mistake of assuming that their possessions are protected by the homeowner's insurance of their landlord or condo association. But the policy owned by the landlord will almost certainly only protect structural damage to the building itself - your belongings are not covered. You own more than you know - One of the most common misconception that renters have is over the value of their possessions. Many tenants assume that a hand-me down couch or outdated TV is evidence that they really don't have many "valuables". But the truth everything you own has value, from used furniture to your computer, movies, music and clothing. The typical renter owns roughly $30,000 worth of possessions - a figure that is completely unknown to them. In the event of a disaster, that's a lot of "junk" to replace. It's relatively inexpensive - While policy pricing varies based on a number of factors, renter's insurance often costs between $10-20 a month. $200 dollars a year is a relatively low cost to protect $30,000 worth (or more) of your possessions. Many insurance companies will offer a discount if you bundle your renter's policy with an auto insurance policy. What Does Renter's Insurance Cover? Personal Possessions - In general, your personal possessions will be covered when lost to fire or smoke, lightning, vandalism, theft, explosion, windstorm and water damage (caused by broken pipes, etc). Items usually covered include: Stereo systems, VCRs, and television sets CDs, DVDs, videos, and tapes Cameras and other photography equipment Movable appliances, including microwave oven Furniture Sports equipment China and glassware Clothing Books Items that are usually covered with limitations: Home computers Cash, including coin collections Checks, traveler's checks, and securities Jewelry and watches Precious and semi-precious stones Comic books, trading cards, and stamps, including collections Antiques and fine art Goldware and silverware (theft) Rugs, wall hangings, and tapestries Firearms (theft) Furs or clothing trimmed in fur Liability - Most renter's insurance policies include some degree of liability protection. Liability protection covers you (up to your policy's limits) in the even that your negligence causes damage to the property, or if someone is injured inside your home. For example, if you leave the sink plugged and running, liability protection would cover the ensuing water damages. Loss of Use/Temporary Housing - If your home or apartment is rendered unlivable by a fire or other disaster, you will have lost your place of residence in addition to your possessions. Most policies cover "additional living expenses" in the event of disasters specifically listed in the plan. Generally this means they will pay for you to live somewhere else while your residence is repaired, rebuilt or you locate new housing. There are limits on this type of coverage - the replacement housing must usually be of similar quality to your original residence, the coverage limit is typically a percentage of the policy's total value, and there may be a maximum length of time that the insurance company will continue paying for your housing costs. Car Interior - Many renter's insurance policies also cover possessions that you keep within your car (CD's, books, portable computer equipment). Note that the car's value itself is not covered, and typically installed stereo equipment (which is often considered "part" of the car's systems) is not insured either. Vacation Coverage - Some policies even go so far as to cover items within your possession while you traveling. This kind of coverage extension varies greatly, but is worth investigating. What Isn't Covered? Renter's insurance is not without its gaps, however. Most policies do not cover damage or loss of possessions related to three very common (and thus, hated by insurance adjustors) disasters: earthquakes, floods and landslides. Coverage for these disasters must be purchased as add-ons (known as "riders") to your rental policy or via separate insurance policies altogether. Inventory If you haven't made an inventory of your possessions, now is the time to do so. Make a list of all items you own including appliances, furniture, electronic equipment, art, clothing, books, music and movies. Take photos or video of as much as possible, indicating where in your home the items are kept. Store this inventory and any additional files in a safe, offsite location as a backup (online storage makes for a quick alternative to a safety deposit box or the like). Replacing Lost Items One major thing to check when shopping policies is the whether the company will be writing "actual cash value" (ACV) or "replacement cost coverage". Actual cash value only pays you for the item's worth on the current market, while replacement cost coverage reimburses you for your actual costs when replace lost or damaged items. For example, if you bought a $1000 laptop computer 3 years ago, ACV would pay for the laptop's current (depreciated) value. Replacement cost coverage will cover your expense for replacing the laptop In most cases, under replacement cost coverage you will have to pay for the items out of pocket and then submit the cost for reimbursement. Replacement cost policies also tend to have higher premiums, but pay out more should you need to file a claim. Questions to Ask: While renter's insurance is almost always a wise investment, you should shop around to find the policy that best fits with your situation. Below are some sample questions to ask when looking for the right coverage: Will your insurance cover any property shared by your roommates? Which items should you take photographs or videotapes of? What are the limits on specific categories of personal possessions? What circumstances are covered in your personal liability? What circumstances are covered in the medical coverage for others? What is the price and protection difference between "replacement cost coverage" and "actual cost coverage"? Will you be notified before any rate increases because of policy changes or inflation? If your building were damaged or destroyed, would you be compensated for interim housing? How much protection would you have if your home were damaged or destroyed because of an action by yourself or a guest? Will your personal liability include defense costs in the case of a lawsuit filed against you?

Rental pricing

We often hear questons about why rental prices are high.  In particular, people are often surprised that it costs more to rent a home than to buy a similar home.  There are several reasons for this:

1. The mortgage payment is lower because the owner invested a substantial amount in the down payment or in improvements to the house.  
2. There are many costs to own a rental home other than the mortgage payment.  Taxes, HOA dues and repair costs are among those.  For example, the owner may have to absorb multiple-thousand-dollar costs like repainting the exterior every few years.
3. The owner is taking all of the risk.  When you buy, you can lose money if you need major repairs or the real estate market goes down.  With rent, your cost is fixed regardless of these situations, that are beyond your control.
4. The owner wants to make a profit.  Some investors are looking for "cash flow" from their rental properties so they price the rent a little above their total costs.   In the past few years, many private owners actually price Below their costs since their objective is just to cover as much of their costs as possible until the real estate market improves.

The monthly payment alone is almost always less to Buy than to Rent a home.  That's IF you have the down payment money, usually about 20% of the sale price, and qualify for a loan.   And IF you don't have to make major repairs.

Another question is "what is a fair rent amount?"  That depends on a lot of factors but, like real estate sale prices, it is mostly related to "comps".  In other words, how much it would cost to rent a comparable home.   Since no two homes are alike, that can be difficult to determine but location, size, number of beds/baths/garages, finished basement, and how updated the home is are key factors.  Two homes that are close on these factors should rent for about the same amount.

There are some general rules of thumb, depending on location.   In Johnson County, Kansas, rent is usually between $0.75 per square foot and $0.90 per sqaure foot.  Average is about 80 cents.  Homes with lots of services and amenities provided by the HOA will be at the higher end as will homes with high-end decor such as granite countertops.  Older homes that have not been remodeled are lower.  So, a "typical" 2000 square foot house in this area will probably rent for $1600-1800/month.  There are exceptions, of course, but you will want to check comparables carefully if rent on the house you are interested in is above or below these averages.

Buy, Sell, Invest or Lease

A recent article in The Kansas City Star Home section http://www.kansascity.com/2013/01/22/4015849/buy-sell-invest-or-lease-with.html

Negotiating Rent

Like anything else, you can negotiate the terms of a Lease. But be aware that negotiating rent is not like negotiating the price on a For Sale home. Real estate for sale is often advertised well above the seller's bottom dollar, anticipating a lower offer. For rentals, advertising at an inflated price will result in few inquiries, so owners advertise at close to the least they can afford to accept in rent.
For single family homes, the published rental price is usually very close to the cost of ownership, leaving little if any negotiating room. This is especially true of private owners who are leasing the property because they needed to relocate but couldn't sell or did not want to sell at a loss in the current market. Since those owners are leasing at their cost or even below they often cannot accept a significantly reduced rent.

A common fallacy is that offering the owner a multi-year lease will entice them to accept lower rent. While a multi-year lease may offer the owner some relief from a vacancy (if the tenant doesn't break the lease early), it also locks them in to the lower rent amount for a long period. For example, a $200/mo reduction on a $1500/mo home for 3 years costs the owner $7,200. The owner can wait for a full price renter, with the property vacant, for 4 to 5 months for that same cost. Most will take the risk and wait.

Another approach is requesting lower rent in return for a purchase option. If the owner really wants to sell the property, this can make sense - but only if the agreed purchase price is high enough and only if the renter can show that they will qualify for a loan at that price at the end of the lease. A purchase option will also most likely require a significant down payment.

Offering lower rent because you do not perceive the house to be worth the asking price is a possibility. Some homes are overpriced, usually because the cost of ownership is high. For a top quality renter, owners might take less if they can. Presenting actual examples of homes priced more competitively is important here. A copy of an ad for the alternative house is a good tool. Keep in mind, if the owner can't afford to take the lesser rent, you may be better off to just rent that alternate.

If you feel the rent is appropriate but only if some things are improved or repaired, you need to understand the owner's situation. An investor who wants to lease the property for long term gain may consider improvements like fencing, light remodeling, etc. Owners tryng to cover their costs until they can sell the home rarely will.

In winter months, the term of the lease can be a good negotiating point if you have some flexibility on the length of the lease. Owners would much rather have your lease end in the spring, near the end of the school year. The home is likely to re-lease faster at that time. A lease ending at the right time may reduce potential vacancy by a month or more. If so, the owner gets about 1/12 more total income so they may be able to pass some that back to you. A word of caution, Never commit to a lease longer than you think you will stay. The penalties for breaking the lease early are substantial and most leases require that you pay the remaining months' rent even after you move out (until the house is re-leased).

The most effective negotiation is offering a reasonably reduced rent for a quick move-in by a highly qualified renter. An excellent credit rating and rental history help the owner be confident the rent will be paid. A reduced risk of missing a rent payment may persuade them to reduce rent. That reduction has to be relatively small, almost never more than 5%-10%. Keep in mind that in considering an offer, the owner is looking at not just the rental income but the risk of damage to the property. Large animals or multiple pets increase that risk substantially and will almost always eliminate your negotiating position.

The least effective approach is "I love the house but I can't pay quite that much". This signals the owner that your budget is already stretched and will probably decrease your chance of the owner accepting a lease from you, regardless of rent amount.

Most owners, property managers and rental agencies will consider a reasonable offer. It just can't be a Big decrease in rent. Do your homework on competitive homes and get any  information you can on the owner's situation and goals. Then, if you feel you will be a highly qualified renter, make an offer!

Getting through the Big Move

Cut Back -

Moving can be a difficult task. Don't make it more work than necessary by moving furniture, clothing, art or other belongings that you don't actually want or need anymore. Look for opportunities to de-clutter your life and get rid of excess possessions.

Hand it Down: Tell your friends and family you're paring down possessions. You'll feel better, and it'll be easier giving up that expensive couch or antique bureau if you know your best friend will make good use of it.

Yard Sale: The tried and true yard sale can help you can get rid of things you don't use and avoid paying to move them. As a bonus, you'll make some extra cash that you can spend on new things in your next home.

Donate: Consider donating unwanted or unsold items to charity. Many charitable causes have free pickup services for donations that make giving your unwanted furniture and items as easy as picking up the phone and scheduling a pickup time.

Packing-

The thought of organizing and packing up a house's worth of clothing, kitchenware, and other items can be daunting to say the least. Even if you are using professional movers, you likely will want to pack and organize certain items yourself. By having a packing strategy, you can make it through the first stage of the move with your sanity intact and avoid last minute panic as the moving trucks pull up.

Inventory: Taking a rough inventory of your stuff will give you a general idea of how many moving boxes you will need. If you will be using a moving company, it's not a bad idea to make a written or photographic inventory to make sure you don't lose anything during the move.

Box Right: Make use of suitcases and plastic storage tubs you already own before searching out moving boxes. You can re-use old cardboard moving boxes, but make sure the cardboard is still in good shape rather than risk damaging any of your items. Purchase frame boxes to protect your pictures and mirrors.

Other Supplies: Purchase high-quality packing tape and plenty of bubble wrap to help safeguard your belongings during the move. Specialty packing paper or packing fill can be used for box fill instead of newspaper to remove the risk of scratching fragile items.

If you will be moving on your own, you should rent furniture pads, straps and furniture dollies from the rental truck company.

Have a Packing Plan: Begin by packing the items you use least often. Pack one room at a time, making sure to clearly label the contents and which room they are intended for. You can also use a numbering or color coded system to help indicate which boxes have the most frequently used items.

Pack Smart: Large boxes should be filled with lighter items such as clothing. Save heavy items like books and dishes for smaller boxes that for easy lifting. Make sure each box is packed full, but also check the weight of packed boxes before sealing.

"Essentials" Box: Pack one box to keep close at hand (i.e., not buried in the back of the moving truck). The idea is to have easy access to items you may need during the move or immediately after your arrival at the new home.

• ID
• Your wallet, checkbook and/or ATM card
• Bottled water
• Toothbrush, toothpaste and soap
• Any prescription medications
• Aspirin
• Snacks that don't require refrigeration or cooking (granola bars, nuts, bread, PB, etc)
• Paper cups, paper plates and plastic utensils
• Towels
• Sheets
• Scissors and tape
• Closing documents if you're buying a new home
• Important files
• Medical records
• Pet food and pet littler, if applicable

Before Moving Day -

Keep People Updated: Contact or visit your local Post Office to obtain a Change of Address form. You can also obtain this form online at http://www.usps.com. Give a change of address to the following: Banks, schools, friends & family, insurance companies, doctors and specialists, cell phone providers, credit card companies and magazine and newspaper subscriptions.

Clean in Waves: Trying to clean your whole house at once (either before or after moving day) can be an overwhelming prospect. Instead, begin cleaning any rooms in your house that have been emptied such as closets, basements or attics.

Get Help-

One of the most important moving tips: you don't have to do it alone.

Move with the Pros: A professional moving company can take the care of all the hard work, leaving you to kick back and supervise. If you feel like avoiding the packing stage as well, most companies will pack your items for an additional fee. Prices and reliability can vary widely between companies, so compare quotes from at least three local companies before choosing a moving company. Don't rely on over-the-phone price quotes from the moving company you select: make sure the moving company comes to your home to accurately assess the space and approximate weight of your shipment. Make sure to check their history with the Better Business Bureau or American Moving & Storage Association.

Moving Consultant: If the mere sight of a cardboard box leaves you feeling overwhelmed, consider hiring someone to handle the nitty-gritty of your move. These consultants are the relocation industry's answer to wedding planners and travel agents -- they can arrange for movers, pack your stuff, switch over your utilities, and transfer school and medical records. If you can swing the price tag, or if your company is covering relocation costs, a consultant can make your move relatively stress-free.

Portable storage: Companies like PODS, U Haul and 1-800-PACKRAT will deliver a portable storage unit right outside your door. Before making the call, make sure you have enough parking on your property to accommodate the size of the temporary storage unit. Fill the storage space at your own pace. When you're finally ready to move, give the service a call and they will deliver the storage pod to your new home. Portable storage units still force you to do all the work, but they are a low cost solution and can serve as an alternative if there is a gap between the time you need to leave your old home and can access the new property.

Rental trucks: Renting a box truck can be a cost-effective alternative to hiring a moving company -- as long as you plan ahead. A 10-foot moving truck will generally hold an apartment's worth of stuff; while a 24-foot truck can accommodate a three-bedroom house. It's best to choose a larger truck; you won't have to cram items into a smaller space, and for cross-town moves you will avoid wasting time on multiple trips. Read the fine print about mileage allowances and fuel surcharges, and make sure you know the rules regarding when and where you can return the truck. Depending on the size of the truck and length of the move, you may consider adding supplemental insurance through the rental company in the event of dings or dents to the truck.

Friends and family: Free labor is great, but you'll likely still need to rent a moving truck (unless everyone in your family has a super duty pickup). Make sure you have every possible detail taken care of before your volunteer labor force shows up; the last thing you want is to leave your friends and family waiting while you pack the last boxes or run to go pick up the rental truck. Ask friends and family to help with packing and loading to a reasonable degree, and expect to return the favor when it's their turn to move. And common courtesy calls for you to provide lunch and refreshments for your friendly work crew.

After the Truck is Loaded -

Once you have everything packed away into the trucks, you'll want to pass through your house and check off a few final items before getting on to your new home.

Damage Control: Check for any damages to walls, doors or frames caused by furniture being moved. The last hassle you need is to lose part of your security deposit or have any issues with the homebuyers because your furniture dinged a door frame or left a scratch in the wall.
Leave Behinds: Re-check the house for anything you might have accidently forgotten. Look through the attic all closets, the garage, any crawl spaces, the medicine cabinet, and the drawer under your oven. Moving can be a difficult task. Don't make it more work than necessary by moving furniture, clothing, art or other belongings that you don't actually want or need anymore. Look for opportunities to de-clutter your life and get rid of excess possessions.

Hand it Down: Tell your friends and family you're paring down possessions. You'll feel better, and it'll be easier giving up that expensive couch or antique bureau if you know your best friend will make good use of it.

Yard Sale: The tried and true yard sale can help you can get rid of things you don't use and avoid paying to move them. As a bonus, you'll make some extra cash that you can spend on new things in your next home.

Donate: Consider donating unwanted or unsold items to charity. Many charitable causes have free pickup services for donations that make giving your unwanted furniture and items as easy as picking up the phone and scheduling a pickup time.

Packing-

The thought of organizing and packing up a house's worth of clothing, kitchenware, and other items can be daunting to say the least. Even if you are using professional movers, you likely will want to pack and organize certain items yourself. By having a packing strategy, you can make it through the first stage of the move with your sanity intact and avoid last minute panic as the moving trucks pull up.

Inventory: Taking a rough inventory of your stuff will give you a general idea of how many moving boxes you will need. If you will be using a moving company, it's not a bad idea to make a written or photographic inventory to make sure you don't lose anything during the move.

Box Right: Make use of suitcases and plastic storage tubs you already own before searching out moving boxes. You can re-use old cardboard moving boxes, but make sure the cardboard is still in good shape rather than risk damaging any of your items. Purchase frame boxes to protect your pictures and mirrors.

Other Supplies: Purchase high-quality packing tape and plenty of bubble wrap to help safeguard your belongings during the move. Specialty packing paper or packing fill can be used for box fill instead of newspaper to remove the risk of scratching fragile items.

If you will be moving on your own, you should rent furniture pads, straps and furniture dollies from the rental truck company.

Have a Packing Plan: Begin by packing the items you use least often. Pack one room at a time, making sure to clearly label the contents and which room they are intended for. You can also use a numbering or color coded system to help indicate which boxes have the most frequently used items.

Pack Smart: Large boxes should be filled with lighter items such as clothing. Save heavy items like books and dishes for smaller boxes that for easy lifting. Make sure each box is packed full, but also check the weight of packed boxes before sealing.

"Essentials" Box: Pack one box to keep close at hand (i.e., not buried in the back of the moving truck). The idea is to have easy access to items you may need during the move or immediately after your arrival at the new home.

• ID
• Your wallet, checkbook and/or ATM card
• Bottled water
• Toothbrush, toothpaste and soap
• Any prescription medications
• Aspirin
• Snacks that don't require refrigeration or cooking (granola bars, nuts, bread, PB, etc)
• Paper cups, paper plates and plastic utensils
• Towels
• Sheets
• Scissors and tape
• Closing documents if you're buying a new home
• Important files
• Medical records
• Pet food and pet littler, if applicable

Before Moving Day -

Keep People Updated: Contact or visit your local Post Office to obtain a Change of Address form. You can also obtain this form online at http://www.usps.com. Give a change of address to the following: Banks, schools, friends & family, insurance companies, doctors and specialists, cell phone providers, credit card companies and magazine and newspaper subscriptions.
Clean in Waves: Trying to clean your whole house at once (either before or after moving day) can be an overwhelming prospect. Instead, begin cleaning any rooms in your house that have been emptied such as closets, basements or attics.

Get Help-

One of the most important moving tips: you don't have to do it alone.

Move with the Pros: A professional moving company can take the care of all the hard work, leaving you to kick back and supervise. If you feel like avoiding the packing stage as well, most companies will pack your items for an additional fee. Prices and reliability can vary widely between companies, so compare quotes from at least three local companies before choosing a moving company. Don't rely on over-the-phone price quotes from the moving company you select: make sure the moving company comes to your home to accurately assess the space and approximate weight of your shipment. Make sure to check their history with the Better Business Bureau or American Moving & Storage Association.

Moving Consultant: If the mere sight of a cardboard box leaves you feeling overwhelmed, consider hiring someone to handle the nitty-gritty of your move. These consultants are the relocation industry's answer to wedding planners and travel agents -- they can arrange for movers, pack your stuff, switch over your utilities, and transfer school and medical records. If you can swing the price tag, or if your company is covering relocation costs, a consultant can make your move relatively stress-free.

Portable storage: Companies like PODS, U Haul and 1-800-PACKRAT will deliver a portable storage unit right outside your door. Before making the call, make sure you have enough parking on your property to accommodate the size of the temporary storage unit. Fill the storage space at your own pace. When you're finally ready to move, give the service a call and they will deliver the storage pod to your new home. Portable storage units still force you to do all the work, but they are a low cost solution and can serve as an alternative if there is a gap between the time you need to leave your old home and can access the new property.

Rental trucks: Renting a box truck can be a cost-effective alternative to hiring a moving company -- as long as you plan ahead. A 10-foot moving truck will generally hold an apartment's worth of stuff; while a 24-foot truck can accommodate a three-bedroom house. It's best to choose a larger truck; you won't have to cram items into a smaller space, and for cross-town moves you will avoid wasting time on multiple trips. Read the fine print about mileage allowances and fuel surcharges, and make sure you know the rules regarding when and where you can return the truck. Depending on the size of the truck and length of the move, you may consider adding supplemental insurance through the rental company in the event of dings or dents to the truck.

Friends and family: Free labor is great, but you'll likely still need to rent a moving truck (unless everyone in your family has a super duty pickup). Make sure you have every possible detail taken care of before your volunteer labor force shows up; the last thing you want is to leave your friends and family waiting while you pack the last boxes or run to go pick up the rental truck. Ask friends and family to help with packing and loading to a reasonable degree, and expect to return the favor when it's their turn to move. And common courtesy calls for you to provide lunch and refreshments for your friendly work crew.

After the Truck is Loaded -

Once you have everything packed away into the trucks, you'll want to pass through your house and check off a few final items before getting on to your new home.

Damage Control: Check for any damages to walls, doors or frames caused by furniture being moved. The last hassle you need is to lose part of your security deposit or have any issues with the homebuyers because your furniture dinged a door frame or left a scratch in the wall.
Leave Behinds: Re-check the house for anything you might have accidently forgotten. Look through the attic all closets, the garage, any crawl spaces, the medicine cabinet, and the drawer under your oven.

EXPECTATIONS ARE EVERYTHING

Most leases result in satisfied owners and happy tenants.   Unfortunately, a few do not go well.  The vast majority of those few problems come down to a mismatch of expectations between the landlord and the occupants.   Not all home leases are alike and, like most agreements, assumptions will cause trouble.    

It is CRITICAL that renters read their lease and raise any questions or objections before move-in.   The most common expectations are outlined below but, please, read your lease document and make sure you can commit to everything that’s required of you and the obligations of the property owner meet your expectations.

RENTER EXPECTATIONS

You expect a home that is clean and everything works properly.  You will want problems fixed right away.   Repairs are the owner’s obligation, within the lease and under the law.  Be reasonable about those that don’t pose an immediate danger or significant nuisance, but insist on quick correction for those that do.

Generally you are taking the home As Is.    Be sure it is what you are willing to live with before you sign the lease.  Any updates or changes to the home that you expect from the owner must be clearly defined in the lease agreement.   Verbal understandings are a common cause of disputes.  If you want to make changes on your own, get specific permission from the owner in writing.

Quiet enjoyment.  That means you should be free from any inspections or other impositions by the owner or the owner’s agent that are not defined in the lease – as long as you are meeting the terms of the lease.    It does not mean that the owner can’t do occasional inspections for mechanical or maintenance issues.  Those should be reasonable and if there is any doubt about what is or isn’t reasonable, be sure it is defined in the lease.  Owners can investigate if they have reasonable cause to believe the terms of the lease are being violated…so don’t give them a reason!     Be aware that, once you give notice that you are not renewing your lease, your lease is likely to require that you allow showings of the home to prospective renters, usually only in the last 30 or 60 days you live there.  

You will want your Deposit returned when you move out.   To ensure that happens, make sure you understand your maintenance requirements, treat the home “gently”, keep it clean, and report any issues that do arise immediately.   Anything that is not as it was when you moved in is likely to reduce the amount of deposit that is returned.   Wall repairs are a very frequent need at the end of a lease.  The best way to minimize surprises on the deposit is to do a thorough walkthrough with the owner or agent at move-in to document any problems that might look like you caused them at move-out.   Finally, make sure you know about any obligations upon move out, such as professional carpet cleaning. 

OWNER EXPECTATIONS

Owners want their investment protected and need enough rent to cover their mortgage and, sometimes a little profit.   Most have primary goal of long term return on investment.   Damage to a home will quickly offset any profits so excellent care of the house is critical. 

Be honest.  The owner accepts your lease based on the information you provide when you apply.  Any false or misleading or withheld information will be a problem.   For example, moving in people or pets that were not on the lease is never ok without the owner’s permission and an amendment to the lease.   Pets are, unfortunately, the most common problem.    They can cause a Lot of damage in seconds and may make the house unsuitable for future tenants with allergies.   It is never ok to have a pet in the home without written permission in the lease.  Never.

Pay the rent on time.   Owners have to have that cash to cover their commitments.   You are not allowed to withhold the rent because of unresolved problems with the house.  Please see your lease for the proper way to get problems resolved.  Also, it is never permissible to use the security deposit as the last month’s rent.

Report any structural or mechanical problems immediately so they can be corrected before they cause further damage.   Water, gas or electrical problems are crucial, even if they aren’t directly causing you a problem.

Respect the neighbors and neighborhood regulations.  Many rental houses are in areas with Home Owners Associations.   The owner must comply with those rules therefore you need to make sure you know about them and follow them.   Even if there is no HOA, neighbors will expect you to keep the house and surroundings clean and free of clutter and avoid any disturbances.

Leave the house just the way you found it.   It is difficult to remove dirt and correct problems that accumulate over time so it is important to maintain everything all the time.   A simple example is keeping the furnace filter changed.

Keep your lease commitment.   The term of the lease is very important.  Leaving early has significant penalties because it costs the owner a lot of money to re-lease the home.   Most people move during the summer months so owners do not want their properties vacated during the winter, resulting in long periods with no rental income. 

As stated above, the most important thing to do is read your lease thoroughly and negotiate any issues Up Front, not when a problem occurs.    As long as both owner and renter are literally “on the same page”, the rental experience will be stress free for both parties.

Do you have thoughts or comments or stories to share?   Please post them here!

Is Lease/Rent–To–Own right for you?

People who are in the rental market because they don’t have the funds for a down payment on a purchase, sometimes look to Lease-To-Own plans.    In some circumstances, these help build some additional  funds toward a future purchase.  They also can “lock in” a specific property that you want to buy in the future.  BUT, there are some important questions you need to consider:

·         What is the required down payment for the Lease-Option program?   In what circumstance can that down payment be lost?   It is common for a Lease-to-purchase agreement to stipulate that the down payment is forfeited in the case of any delinquent payments.   A change in employment or marriage status or other personal changes can put that money at risk.

·         What is the purchase price of the home at the time of purchase?   In a market as volatile as the past three years, this can be a major issue.   Generally the price must be at or below the appraised value at the time of purchase.   In a changing market that is very hard to predict.   One way to alleviate this problem is to state the selling price as an amount over or under the then-current appraised value.   Be aware that if the value goes down substantially, the owner will not want to sell.   And if it goes up a lot, you may not be able to finance that price.

·         Is the owner charging above going-market rent to pay for the accrued funds from each month’s rent? If so, you may be better off renting at a competitive rate and depositing the difference in savings. 

·         Will this really be the right house for you several years in the future?  Changes in taste, styles, family situation, employment, neighborhood environment and many other things might cause you to make a different decision.   In most lease-to-purchase agreements, you will lose your down payment or at least give up the benefits of the agreement if you back out.

Lease To Own CAN be a path to home ownership.   Just go into it fully aware of the issues above.  Then move forward if it still makes sense.