Padzilla Blog: Tenant Tips for Living Large and More

Tenant Tip #14

Last time, I stressed how important a good credit score can be. Basically, the better your credit score, the better price for loans/credit. More goods and services will be at your fingertips as well. It makes finding loans easier, faster, and if you want to buy a home, it’s vital.

Well, good rental histories work like good credit. Many property owners and managers in Maine use firms like Tenant-Net to conduct a review of your rental history before you are accepted for an apartment.

That review will look at Court records (like evictions, money judgments and collections, bankruptcy, etc.) to see if you have had filings. They will also scour their databases to see if any of your earlier landlords submitted a rental history.

Guess what? If your record shows a prior eviction, or if you failed to pay your cell phone bill, car loan, etc. and a case got filed against you, each future landlord will be much less likely to rent to you.

GOLD STANDARD: On the other hand, if you have a stellar track record as a tenant (no evictions, paid bills on time, always kept the peace) that will help you not only find, but negotiate for the best apartments. Owners are always looking to find the best tenants, and if you are one, that track record… like good credit… helps you land that sweet new pad!

ARE YOU A GREAT TENANT?

Then here’s what you do. Ask your Owner-Manager if they send rental reports to Tenant-Net. If they do, great, make sure though they promise to file a report when you leave the unit. Ask for a copy. If they do not use a firm like Tenant-Net, ask them to consider it. It costs nothing to join, and they can file a report on-line 24/7 or over the fax.

If your Owner-Manager hesitates, just tell them Tenant Net will even pay them for the report! YES. THE OWNER CAN MAKE MONEY. So, it’s in their best interests to help you!!!

Just like a good credit score, a good report to Tenant-Net is gold for you. It will help make your next Owner more likely to rent, more likely to offer the best deal possible.

Your conduct determines your future… pay bills timely and you get a good score, good score makes loans easier and cheaper. Same thing with renting, what you do, your conduct, will partially determine your future options.

Tim Murphy
Padzilla.Com

Tenant Tip #13

You have all heard about credit “scores” and how important they are. Think of them like grades in school… basically the financial world ranks you on a scale based upon how likely you are to re-pay bills.

So, if for example you pay your bills, timely, your score goes up. Pay late, and your score goes down. Manage to carry more than 1 credit card, and pay both timely, your score goes up, inability to manage multiple cards, and your score goes down.

Carrying multiple financial obligations (car loan, credit card, card #2, etc.) shows financial strength. Failing to pay anything on time shows financial weakness.

The above is a boiled down example, but it’s meant to show how certain facts/factors can improve or lower your credit score. The big three credit agencies actually look at many, many individual factors and they plug that raw data into a scientific formula of sorts. At the end of it all you, me and everyone who enters the financial world are assigned a credit score based on these facts.

Does this matter to you? YOU BET!

For tenants, it can affect you in several ways. Let’s consider just a couple:

1. Finding a new apartment. Many property owners and managers rely on tenant screening services to find good tenants, and identify potential problematic tenants, including those who might fail to pay, or who have prior evictions. As they review applicants, owners will often secure your credit report and can assess your credit score.

Do you think they like low scores, or high scores? Of course, they understand the higher the score the better for them. At least one major Portland property manager has very specific credit score standard for leasing their property. Those whose scores fall below a certain number are not accepted.

In effect, having a poor score will limit your choices of apartments, and make finding one that much harder.

2. Purchasing a car. All banks use credit scores to make lending decisions. It may not be the sole factor, but it’s a very, very important one to any prudent lender.

Do you think banks prefer to loan money to folks with low credit scores or high? Simple question, simple answer. You know it matters to a bank. And, if the bank agrees to loan you funds to buy that new car, the actual interest rate you pay may be higher or lower based on your score.

Consider that last point. Banks do not charge uniform interest rates. One person might get their car loan at 4.95% while someone else pays 5.50% for the same money, to buy the same type of car.

Why? Because the two folks have two different credit scores, and one person poses more of a risk that the loan will default, and so their loan gets priced higher!

Having a low credit score can mean the difference to you between a car payment of 305/month, and a car payment of 395/month. What could you do with an extra 90/month or an additional $5400 over the course of typical 5 year car loan?

3. Moving into your first home, condo. That’s right. Someday you will want to own your home or condo. It matters here as well. Banks will loan based on your credit score.

No one said it’s fair, or perfect, but it’s the system used by today’s financial world. Heck, corporations, and even countries get credit ratings, and their loans as well get risk priced. So, it’s a fact of life these days.

Knowing that, you simply have to choose ways to improve your score, and avoid acts that injure your score. In the long run, this will save you big, big dollars…

Tim Murphy
Padzilla.Com

Tenant Tip #12 – One More Insurance Tip…

You may recall I mentioned the value of renter’s insurance last time. Here’s one related thought.

Bet you own a car. Okay. Check your insurance policy. There are two parts to review and consider: liability coverage and uninsured motorist (so-called “UM”) coverage. Many of accident victims I see in my law office lack sufficient uninsured motorist coverage.

Does it matter… Yes, you bet and here’s why!

You need basic minimum liability coverage, at least equal to the state minimum, and more than that if your assets exceed the state limit. BUT REMEMBER, LIABILITY COVERAGE PAYS SOMEONE YOU HIT AND INJURE.

My experience, however, has been you are more likely to get hit by an uninsured driver than to cause an accident yourself. So, while it’s important to insure drivers against your negligence, it’s more important to protect yourself against everyone else.

IT’S THE UNINSURED MOTORIST PART OF YOUR POLICY THAT PAYS YOU IF YOU GET HIT AND HURT!!!!!

So, while its good to focus on liability coverage, it’s the UM coverage that will protect you and your assets and family!

Also, take a look at the so-called “MED PAY” portion of your auto accident. It will pay your medical bills if you get hurt in a car accident. You can double or triple that coverage for peanuts.

Remember, you need to carry minimum liability insurance. And, you should carry enough to protect your assets, but never forget that UM coverage is the part of the policy that protects YOU. PAY and PROTECT YOURSELF FIRST!

Tim Murphy
Padzilla.Com

Not having adequate insurance is like gambling. You might be OK, but you might lose… BIG TIME.

Try this test – add up the cost you to replace the following: Your HDTV, your stereo, your computer, your laptop, your mobile phone and your CDs/DVD’s… you know, the stuff you really value.

Add it up… is it over $2500? Bet it is… Well, have you got that kind of spare cash lying around? What about replacing your furniture, clothes, dishes, bath and bedroom stuff, bet that’s another $2500 at least.

So, who pays for that stuff if there is a fire at your building… happens while you are traveling, or at work. FYI, the Landlord’s insurance will not usually cover your personal effects.

Remember the big ice storm last December… suppose the pipes freeze and burst in your building. You get major flood damage. Can’t call the government… even if they failed to predict the big storm! Owner’s policy wont pay for your stuff… what do you do?

Oh, you pay out of your own pocket!

That’s the thing about risk and insurance… you and I simply cannot predict events in life. Despite precautions fires happen, despite weather predictions, floods and ice storms happen. We all know bad events happen, and happen without warning.

Purchasing insurance shifts risk of such events onto the insurer for the price of the premium. If you can afford the loss of your property, then the gamble may be worth taking. BUT, if you cannot afford to replace your stuff, renter’s insurance is a relatively low cost way to shift the risk off your plate and protect your assets.

Think about it this way. Your assets are part of your total wealth. The building you live in is part of the owner’s total wealth. The owner insures the building in case of flood and fire. So, they are insuring their wealth, paying over some cash to shift risk and protect their wealth. Shouldn’t you do the same thing? Isn’t your wealth as important to you as any property owner?

Tim Murphy
Padzilla.Com

I recall a lawsuit filed over injuries which occurred at an apartment in Portland. Basically, a small child was leaning against a window screen of a second or third floor apartment. Well, as you can guess, the screen let go, and the child fell out the window and was severely injured. You may recall singer-songwriter Eric Clapton’s son was killed some years ago in a similar freak accident after he fell out the window of an apartment in New York City.

You would think the apartment owner would be automatically liable, but that the Portland, Maine case went to suit is proof that first impressions are easily mistaken. In some circumstances, the tenant controls the mechanism of injury. In those cases, the Court may find the tenant responsible for their own injuries.

In the Portland case, the mechanism of injury was the window and window screen, and the Court had to determine who “controlled” the window. Who was responsible for its upkeep, its usage? In other words, it was not clear if the Owner or the Tenant controlled the window.

DO NOT ASSUME YOUR OWNER WILL ALWAYS BE LIABLE. In some cases, the tenant can be liable for any injuries which happen because the tenant controls the mechanism of injury.

To avoid problems, it’s always best to be on guard as to safety issues. Your guests are assuming you keep the unit safe. But, have you made it so? Have you identified and tried to eliminate potential causes of injury, such as bad wiring, loose fittings, broken glass, etc?

Also, do not assume a needed repair is the Owner’s responsibility. It’s best to ask. Take the pre-emptive step of checking before something bad happens.

LAST BIT OF ADVICE: Always document requests made to an Owner to repair anything in the apartment you feel is broken. The best defense you can have is that you noticed the owner, you asked for help… document those requests, and keep copies!

Tim Murphy
Padzilla.Com

Photo credit: therichbrooks

You’ve heard that phrase… It’s a buyers market. Today, it’s true. If you have cash, there’s much to buy and lots of desperate sellers. It’s true for real estate, true for cars, true for travel, clothes, etc. Today, a buyer with cash can negotiate a very good deal for almost anything.

The same holds true for renters!

Today, it’s a renters market. I hear from Owner/Managers often, and they tell me their vacancy rates have crept up. That means you, as a renter, have the bargaining edge. You can negotiate a better deal if you are willing to follow these tips:

1. Look at several units.
2. Compare rental rates, and politely let owners know you’re checking.
3. Negotiate.
4. If necessary say no.

Let me tell you. “No” is one of the most powerful words in the language. When a seller or property owner/manager realizes you truly are willing to walk away, suddenly, their knees can grow very weak, their negotiating position can erode. But, it only works if you are truly willing to walk away.

Now, something may seem so great you do not want to walk away. OK. It’s possible. But my experience with cars, houses, etc has been that no matter how good something looks today, there is something equally good, or even better, you just haven’t seen or found yet (hence point number 1 above).

So, look at this way, once you’ve found a property that’s equal or better, you have the ability to negotiate from strength. Why, because you have the power to say no, the power to walk away. Remember whether its sellers and property owners/managers, these folks rarely want you to walk away, particularly if they are sitting on 1, 3, 8 vacant units.

SNEAKY TIP: Try to assess how many vacant units are at a property before you see the Owner. The number of vacant units increases your negotiating position as the owner is more hungry, more willing to discount. Ask some other tenants living around the building, or neighbors.

GOOD LUCK!

Tim Murphy, Owner
Padzilla.Com

So your brother is visiting from Whatsamatter U. and he wants to couch crash in your Pad. Should you tell the Owner, do you need permission, should I even care?

All good questions. The answer is being open and above board with your Owner will, as I’ve noted before, win you points. Deceit and deception, probably a bad idea… So, my recommendation is let your Owner know that “BRO” will be crashing but its only 4 days until classes resume. In most cases, they’ll be OK, and will appreciate your asking.

If you do this sort of thing, make sure you live up to your word. Do not push the license the Owner has kindly extended. In other words, if you said your brother will be gone in 4 days, that’s the deal and stick to it!

Never ever take in a roommate without letting the Owner know and securing permission

Such arrangements are almost always a violation of the Lease. That’s means you can be evicted, and your odds of winning are slim, very slim.

Oh, you think no one will find out! I see. Owners are blind, and never have any idea what’s going on. Or so you think.

OKAY, that might work for a while, but Owners almost always know what’s going on. If they don’t, they know to ask your neighbors in the building, and you can count on being ratted out… it’s only a matter of time.

Think of it this way. I’ll bet you keep close tabs on your iPhone , your car, your girlfriend or boyfriend… you know, all the things you value.

Well… owners value their property the same way you value your assets. If a building like you are living in has a fair market value of 1.5 million, don’t you think the Owner will keep an eye on what happens there? Trust me, they watch more than you probably realize.

You may be leasing it, but they own it!

It’s great to have guests, to show off your posh PAD. That’s a privilege of LIVING LARGE. Remember though, there is a difference between guests and virtual tenants.

Tim Murphy
Padzilla.com

Photo credit: super-structure

Those were key words to you when you saw an ad, and applied for a unit. Heat Included meant you were protected from exploding oil or propane prices. It meant you could keep the heat up to 72 not 65 because…well… someone else is footing the bill. No more extra sweaters, no more kid’s runny noses. Heat Included. Yes!

Let’s face it…we live in Maine. That means basically 9 months of winter, and 3 very cool months in summer to round out the year. Heck this past August, some nights were down to the 50’s. We are a “heat” state. Florida, that’s an AC state.

So, heat is a fundamental aspect of LIVING LARGE in Maine.

If you are a “heat included” renter, please bear in mind how rents get calculated. You see rents are set by Owners, in advance, after factoring expenses, to run a building (insurance, mortgage, taxes, equipment, management, utilities like heat, etc) and adding a profit percentage in, and then dividing that required survival number by the number of units in the building, and by further dividing by 12 months.

Bear in mind, this process requires the Owners to guess or estimate a bit. When they plan utility expenses for 12 months, believe me, they are guessing what they’ll need/spend.

So, in those buildings where heat is included, the Owner front loads the estimated cost of heat into the rent. Your heat, your neighbor’s heat, its all factored into the rent and essentially amortized over all the units of the complex/building.

In effect, you are pre-paying every month for your heat.

Now, this can be helpful when and if like last summer (summer 2008) petroleum prices dramatically spike upward. You have price protection because your lease fixes your rent, and it’s the Owner who gets burned because they are obliged to provide heat even when the price of oil goes through the roof!

But, it has some disadvantages to you as well. If you do not heat as much space, or can live at a lower temperature in your apartment, too bad. You get no credit towards the rent, no thanks for dropping your thermostat to 67. The total heat bill, like all fixed expenses, is amortized over all units regardless of usage.

In effect, you might be paying for heat you never really used.

Worse, suppose one year your Owner got seriously burned by high oil bills. Guess what. They will over-estimate utility costs the next year to account for and off-set the risk, and that means your rent the following year goes up even if oil prices do not rise, and even if oil prices fall. In that scenario your Owner pockets the windfall.

Heat included means you are trading the ability to self manage a cost, in exchange for one year of price protection. That’s maybe a great bargain, but you need to understand the risk of that trade.

It also means you pay the same share of the freight if you are careful, and the same as your neighbor who leaves his kitchen window open in February because they are thoughtless. In other words, you pay the same if you are frugal and the same if your neighbor is a thoughtless wasteful jerk.

There is no FREE anything. Heat is simply factored in by Owners in some fashion. Were it not, your rent might be less.

So, consider whether you are willing to give up the ability to manage a cost element like heat. You do gain assurances from price spike and that can be a good trade.

Just understand the bargain you are striking.

Tim Murphy
Padzilla.com

It’s true. Some landlords are always going to be picky; however, my experience has been that most are very grateful if their tenant does a thorough job of cleaning. In fact, when you turn-over the keys, there will be a smile on their face if they find the following:

1. A clean, empty fridge and clean stove
2. All rugs and floors vacuumed
3. Bath tub, sink and toilet scrubbed
4. All, I mean all, furnishings removed

All told, once you move out your furniture, the cleaning described above in numbers 1-3 might, might amount to 3 hours good work. Let’s say your security deposit is $900.00. That means you are really getting paid at a rate of about $300/per hour for that work. Not bad! No taxes on it either.

Remember, clean means all the crumbs out of the stove, and all grease and stains removed as well. It means take all food and other items out of the fridge, and properly dispose of them. Do not leave a big bag of trash for your Owner! Take 3 minutes and walk it to the dumpster…

If you handle these 4 things, most landlords will happily return your security deposit without deduct (assuming there has been no damage).

Flip it around, if you fail to do these things, the landlord will due the work or pay someone to do they work, and they will make the $300/per hour. Can you afford to easily part with 900 big ones?

Think of it this way, when you go looking for an apartment, what places in the apartment can make or break the deal for you. Yes, the bathroom or kitchen. Did you ever rent a place with a filthy, unclean bathroom, or kitchen? I bet not. Well, whoever is renting after you will be looking at those same places in your former unit.

Since re-renting your former unit as quickly as possible is critical to most Owners, the above list details for them what are the most crucial issues related to your leaving. By tackling these four in an expert, thorough fashion, you are making the Owner’s life easier. And, they will, in most part, reward you for it.

Tim Murphy
Padzilla.com

PS: always turn off all the lights, and remember to lock the door when you leave.

Few things guarantee the filing of an ugly Tenancy Report with my company, Tenant-Net, than the willful destruction of an Owners property or apartment. See a sample report here.

OK, your Owner said something you didn’t like. Or, he’s threatened to file an eviction, or he has filed and you have a Court date. You think: I”LL SHOW HIM!

You take every light bulb, or you flip dog doodoo against the wall, pee on the rug, or you pull out the toilet. Believe me, it’s not a new idea, someone has already done it before, and probably regrets doing it…

STOP, THINK, PAUSE, AND NOODLE.

Ever hear of the golden rule? It’s simply wrong to vandalize property!

OK, maybe that doesn’t persuade you. Try this…

We have an expression here that says: It’s cheaper to obey the law. In other words, look at it from a dollars and cents point of view, meaning your dollars! Many laws are designed to financially punish folks who violate them.

You are responsible for everything that goes on in the unit whether you are there or not. In other words, they do not need film of you damaging the unit. It’s your apartment. You are liable for all that happens there.

In short, it could well cost you money, serious money, to enjoy the privilege of damaging an apartment. You’ll lose your security deposit, and you will probably get sued for damages. Any idea what lawyers cost? I can tell you… a lot!

So, save yourself a ton of DOUGH! Never, ever damage a unit. Living Large requires having respect for the rules of civil society.

Tim Murphy
Padzilla.Com