Posted on

Renters Insurance

Landlords should insist on renters insurance for their own protection. As a marketing tool, you can often include the insurance as a free bonus to tenants.

Renters insurance can be purchased for around $210 a year for $10,000 replacement cost coverage, $100,000 liability, and a $500 deductible. That quote is for a policy that does not depend on checking credit scores or insurance history. Tenants who suffer a loss are less likely to sue the landlord (for the tornado, the theft, the fire, whatever) if they have insurance they can use. The money has to come from somewhere, right? The liability portion provides a fund in case the landlord has claims against the tenant for being the one who burned the place to the ground, as one example. Another situation would be if your tenant were sued for harming somebody, he would have money available to pay your rent while his renters insurance pays for legal fees and paying off claims.

Tenants often have no idea the insurance is so cheap. They are usually reluctant to spend the time calling for quotes or filling out online forms. Many have been unable to get economically priced insurance for health or auto. Or, they bought insurance in the past and then lost it when they could not keep up the monthly payments. To them, it seems like a waste of time to try to get renters insurance.

In my experience, a landlord who spends $17.50 a month on renters insurance can almost always price their rent $20 a month above the market, if they offer the insurance at no charge! Plus, just offering the insurance gives them a competitive advantage in the market place.

Call your own insurance agent to check out prices, policy limits, deductibles, and underwriting criteria that might cause the premium to be higher. Then have your lawyer help write up the disclaimer language that goes with your marketing, so you don’t get locked into paying higher premiums than you intended. Let us know how it works for you!

Posted on

Extra Revenue

Most apartment complexes have open parking. The first one to find a spot, gets the spot. Until next time. When someone else might get the good space.

Apartment complexes around the country are setting aside 10% to 15% of their spaces for reserved parking. Tenants can pay for the expense of a sign for their reserved spot, plus parking space rental of $20 to $200 per month, depending on market conditions and apartment rental rates. The tenant of a luxury apartment renting for $1,500 a month would think nothing about spending another $100 for a reserved place. If you charged only $20, you’d be leaving money on the table.

Yes, there are some headaches with people illegally parking in someone else’s reserved spot. A large fine to the guilty party if a tenant, or towing the offending car if anyone else, will send the right message and avoid future problems.

Using a conservative cap rate of 6%, adding $1,000 a month in reserved parking fees results in $12,000 a year of additional revenue and an increased value of $200,000 for the property. There are no additional expenses in creating that revenue and value, because the tenant pays for the sign!

Posted on 5 Comments

Unpaid Water Bills

You are not liable for your tenant’s bills unless you agree in writing!

Local water authorities cannot make landlord pay former tenant’s past due water bill before turning on water for new tenant. They claim they can, because of their local “rules,” but that doesn’t make it legal. Anybody can make up rules for their handbooks. If you agree, then that’s a contract. Otherwise, it’s just wishful thinking on their part.

Ala Code Section 35-9-15 says, “The provider of goods or services may not require a landlord or real property owner to pay the delinquent bill of a tenant for goods or services provided to the tenant of the landlord if the account for the goods or services is in the name of the tenant. In addition, the provider of goods or services shall not have a lien on the real property for any goods or services provided in the name of the tenant.” Also, Section 35-9-14 says, “Notwithstanding any other provision of law, any bill for sewer service received in the name of a tenant or tenants, shall be the sole responsibility of the tenant or tenants and shall not constitute a lien on the property where the sewer service was received.”

If local water authorities refuse to connect water for a new tenant just because the old one has an outstanding bill, show them a copy of this article. If that does not work, contact the attorney for the water authority.  Usually, THAT person knows how to read a statute and understand what it means.