3 Reasons to Invest in Real Estate During a Recession

Investing is a game of winning or losing, defined, most of all, by economics. Of course, we never truly know what direction the economy is heading. However, you can hedge your bets for better or worse depending on the quality of your decisions.

When an economic downturn hits, such as the one we could be potentially experiencing now, investments generally suffer losses. GDP growth in Q1 fell short of expectations, declining by 1.4%. If that trend holds through the end of Q2 and we register another quarter of GDP decline, we’re officially in a recession by definition.

So, as investors, how should you be preparing? Invest in real estate. 

Real estate values have continued to increase despite numerous recessions over the last 60 years. Sometimes, they’ve increased during the recession itself.  

Even in the Great Depression, investors won big on real estate stocks in particular.

But why is this so, and what does this mean for you as a rental property owner? Again, what can you do to benefit from buying investment properties? 

Let’s talk about it. 

Why is Buying an Investment Property Attractive Even in Bad Economies?

Real estate is one of the most stable investments when the economy is nosediving. Rental housing generally serves as a natural hedge in market volatility. This is mainly because homeownership rates suffer a dip during economic downturns like recessions.

As a result, property owners become renters, leading to higher demand for rental properties in such situations. If the economic downturn is accompanied by an early decline in real estate market values—which is often the case—there’s a chance that there would be a brief window of time where you could purchase properties at a discounted price. 

By sticking to the formulas we’ve all learned in real estate and paying no attention to feelings, you can make informed decisions, buy a property with a good cash flow, and make a profit, all during a recession.

3 Reasons to Invest in Real Estate During a Recession

1. Housing is always a basic need

When an economic crisis hits, people lose their jobs, income, and potentially their homes. During these periods, it can be quite easy to find renters. Housing is a basic need, and there is always a demand for housing. We can hold off on buying a new phone or a new car, but it would be rare to find someone voluntarily deciding to live on the street. 

You won’t have serious problems finding tenants if your rental property isn’t neglected. Proper management of your properties and buying your home in a great location are crucial to maximizing the benefits of your investment property. 

2. Residential real estate over commercial real estate offers comfort during recessions

You might think that commercial real estate is more dependable than residential real estate. After all, some companies have survived a flurry of economic crises since the 18th century, so they’re experienced enough to stay afloat. 

But if our experience with COVID-19 told us anything, commercial real estate isn’t as straightforward as it seems. Many businesses closed down, old and new, whether by economics or by force. We find ourselves in an interesting spot and must consider the external threats to commercial real estate right now, such as supply chain issues and the rising cost of gas.

On the other hand, residential homes aren’t subject to the economics of business and the global economy. People need a place to live, regardless of what’s happening in the world.

3. Real estate tends to be more stable

The Great Depression and dot-com bubble flipped the stock market on its head, but investors in the residential estate space didn’t suffer as severe losses. In fact, single-family rental assets recorded positive values as a sector at the tail end of the Great Recession. 

Small-scale residential real estate investments aren’t a part of daily trading activities like stocks. As such, they provide stability when stocks are volatile. 

As a rental property owner, buying investment properties is undoubtedly an attractive and worthy adventure with many economic benefits. But before you write that check, here are tips to help you make a great home-buying decision and maximize your investment properties in the long run. 

Tips To Keep in Mind When Buying Investment Properties

Below are two rules to follow that will help maximize your real estate investment. 

  • Consider the location
  • Think about cash flow 

1. Consider the location 

When evaluating rental properties to buy during an economic crisis, get the full lay of the land. It’s vital to remember that the goal is to buy the location, not the house. Therefore, scout out areas with stable employment and job growth potentials. 

The job market can upset your rental income plans. Tenants may be unable to pay rent and relocate to another area if they’ve been laid off and have difficulty finding a new position.

What’s more, consider lifestyle too. For example, areas close to downtown are more desirable for renters. However, when an economic crisis comes around, residents might wind up changing their location sentiments. Be sure to track the trends. Are people looking for urban dwellings? Suburban or rural?

In 2020, we saw a significant shift towards the suburbs and rural areas due to the rise of remote work and a desire for more space. Will this change with the next recession? 

2. Think about cash flow 

Another rule to help you make the best real estate deals is keeping cash flow top of mind. For example, suppose you’re looking to include a rental property in your portfolio during an economic crisis. In that case, check out properties with excellent cash flow. These are properties with cash still coming in after removing expenses and mortgage payments. 

Such rental properties will help minimize the risk of even a recession. 

Bottom Line

No one wants to suffer in a bad economy. It upsets our finances and could dramatically reverse the course of our lives. But for rental property owners, this doesn’t have to be your story. Instead, an economic downturn can place you at a vantage point where you can benefit from the crisis.

Remember, even in economic uncertainty, you get to tip the odds in your favor—depending on the quality of your decision when investing in the rental property market.

Written by: Remen Okoruwa Original Article: https://www.biggerpockets.com/blog/reasons-to-invest-in-real-estate-recession

Do Short-Term Rental Hosts Have a Bigger Tax Burden? Here’s What to Know

Short-term stays using popular rental services like Airbnb are quickly becoming the norm. Those with listings on Airbnb are generally house hacking or using their homes as vacation rentals on a short-term basis. It’s a great system and an excellent way to earn a premium rental charge over a typical monthly rental.

But how do Airbnb taxes change your total liability?

If investors are not careful, they may end up subjecting the income earned from Airbnb or similar hosting services to self-employment taxes at an additional 15.3% rate. Let’s discuss how you subject yourself to this tax and ways to avoid it.

Self-employment taxes can be part of your experience when renting out your property on Airbnb or similar sites. Your income from renting your house will need to be reported to the IRS when you file your tax return.

Keep in mind that Airbnb does not withhold taxes from your rental profits. Airbnb will issue you a 1099-K if your earnings exceed $20,000 in one year, and the company will report your earnings to the IRS. It’s best practice to report your total earnings regardless of your profit each year.

With self-employment, you are able to deduct business expenses (more on deductions later in the post). However, there is an additional income tax involved with a rate of 15.3%. Since self-employed taxpayers are both the business and the employee, you are responsible for paying Social Security and Medicare taxes. This could decrease your annual earnings and increase your tax bill if you’re not careful.

If you rent your house or vacation house for 14 days or less during the year, you do not need to pay any state or federal taxes. Airbnb taxes are easy, then! The 14-day residence rule applies only if you live in the home for at least 14 days during the same year.

Photo by Gabby K on Pexels.com

If you rent your house or vacation house for over 14 days per year, then you are going to be required to report rental income earned to the IRS. The question is whether you should report this income on Schedule E or Schedule C.

Generally speaking, you don’t have a choice and must report rental income on Schedule E. This is advantageous over Schedule C because reporting income on Schedule C subjects earned income to self-employment taxes. This explains why investors who flip and wholesale properties usually establish S corps to minimize the self-employment tax liability.

Reporting income on Schedule C will also generally disqualify that income/loss from the generous passive activity loss deduction, which can be up to $25,000 pending you meet adjusted gross income (AGI) thresholds. The IRS takes the position that if you are reporting rental activity on Schedule C, it is no longer rental activity but rather a business.

If your average rental period is over seven days but less than 30 and you perform substantial services, then the IRS assumes you are running a hotel or a bed and breakfast. This income will be reported on Schedule C and subjected to self-employment taxes.

The problem is that net losses from these activities are still going to be considered passive losses, and as stated above, you may be ineligible for the passive loss offset of $25,000. So, it’s really a lose-lose situation being that your earned income is subject to self-employment taxes or your losses can’t be deducted.

If you rent your house or vacation house for over 14 days per year, then you are going to be required to report rental income earned to the IRS. The question is whether you should report this income on Schedule E or Schedule C.

Generally speaking, you don’t have a choice and must report rental income on Schedule E. This is advantageous over Schedule C because reporting income on Schedule C subjects earned income to self-employment taxes. This explains why investors who flip and wholesale properties usually establish S corps to minimize the self-employment tax liability.

Reporting income on Schedule C will also generally disqualify that income/loss from the generous passive activity loss deduction, which can be up to $25,000 pending you meet adjusted gross income (AGI) thresholds. The IRS takes the position that if you are reporting rental activity on Schedule C, it is no longer rental activity but rather a business.

If your average rental period is over seven days but less than 30 and you perform substantial services, then the IRS assumes you are running a hotel or a bed and breakfast. This income will be reported on Schedule C and subjected to self-employment taxes.

The problem is that net losses from these activities are still going to be considered passive losses, and as stated above, you may be ineligible for the passive loss offset of $25,000. So, it’s really a lose-lose situation being that your earned income is subject to self-employment taxes or your losses can’t be deducted.

Substantial services are primarily for your tenant’s convenience, such as regular cleaning, changing linen, maid service, cooking meals, etc. Substantial services do not include the furnishing of heat and light, cleaning of public areas and trash collection. Basically, anything a hotel would do qualifies as substantial services for the convenience of your guests.

To illustrate this, let’s assume you buy a place for $100,000 cash and use Airbnb and other hosting services to rent it out. For the entire year, you gross $25,000 and after all expenses, including depreciation and amortization, you have $10,000 net income.

Assuming your average rental period was more than seven days—and you did NOT provide substantial services—you will report the income and expenses on Schedule E, leaving your net income as $10,000.

If you DID provide substantial services, you will report your income and expenses on Schedule C, which subjects your net income to self-employment taxes, a 15.3% tax rate. Now your net income before being subject to your marginal tax rate is only $8,470.

How to mitigate Schedule C risks

  • Set a minimum rental time period of eight days.
  • Don’t provide your guests with substantial services such as cleaning their rooms each day, doing their laundry, changing their linens, and providing them daily meals.
  • If you can, push your average rental period to greater than 30 days.

The key point is that income is generally better reported on Schedule E than Schedule C. Short-term and vacation rentals increase your reporting risks and can have a significant impact on your tax liability. Take the necessary steps today to mitigate your reporting and tax risks.

Business deductions on Airbnb taxes

You might be wondering if there’s anything else you can do to minimize your tax liability. If you are self-employed, you can deduct business expenses, such as rent or mortgage, Airbnb service fees, insurance, property taxes, and more.

Repair costs and home improvement costs can be deducted too! Be sure to save your receipts and keep your finances organized regarding your short-term rental property. It’s better to be prepared in case the IRS has questions.

Don’t forget occupancy taxes!

Occupancy taxes are paid to state and local governments when you own and operate a short-term rental property.

Airbnb automatically withholds occupancy taxes for certain areas. Check if your state has an agreement for Airbnb to withhold occupancy taxes. Otherwise, you must pay them from your net profit.

Article written by Brandon Hall, April 20, 2021. Original Article Here: https://www.biggerpockets.com/blog/airbnb-taxes

Is the CDC Eviction Moratorium Unconstitutional?

Last Thursday, a federal judge ruled that the Center for Disease Control’s (CDC’s) moratorium on evictions is unconstitutional. The judge, John Barker, declined to issue an injunction against the CDC’s rule, but said that he expects that the CDC will respect his decision and withdraw the moratorium.

So far, the CDC has not issued a statement.

One caveat: Even if the CDC order is revoked, many states have similar bans on evictions in place.

The CDC first issued their order, titled “Temporary Halt in Residential Evictions to Prevent the Further Spread of COVID-19” on September 1, 2020. The CDC’s reasoning for this order was to limit the number of evicted persons crowding in homeless shelters or moving in with friends and relatives, which could worsen the pandemic.

The rule prevents landlords from evicting tenants who meet the following criteria:

  • Earn less than $99,000 per year, for individuals, or $198,000 for joint filing
  • Have received a stimulus check or reported no income to the IRS in 2019
  • Have used their best efforts to obtain government assistance for housing
  • Cannot pay full rent due to loss of income
  • Are attempting to make at least partial rent payments
  • Would be homeless if evicted.

Tenants who meet these criteria are required to sign a declaration, under penalty of perjury, that they meet these criteria.

The order was originally meant to expire at the end of 2020 but was extended until the end of March 2021.

The plaintiffs in the case—Texas Public Policy Foundation and Southeastern Legal Foundation—argued in their lawsuit that the federal government lacks the authority to impose an eviction ban.

Judge Barker agreed, stating “The federal government cannot say that it has ever before invoked its power over interstate commerce to impose a residential eviction moratorium. It did not do so during the deadly Spanish Flu pandemic. Nor did it invoke such a power during the exigencies of the Great Depression. The federal government has not claimed such a power at any point during our Nation’s history until last year.”

Until the CDC or other parts of the federal government respond to Judge Barker’s order, property owners and tenants are left guessing what will happen next.

Article written by Dave Meyer

Original Article: https://www.biggerpockets.com/blog/eviction-moratorium-unconstitutional?utm_source=Iterable&utm_medium=email&utm_campaign=Newsletter%20%7C%2003/04/21

Collecting Rent Amid a Pandemic

As the Coronavirus continues to create chaos for all of us, landlords are doing their part to work with their tenants while both struggle with economic hardship and financial uncertainty. During these times we need to continue communicating with one another to find reasonable solutions while understanding that the health, safety and the welfare of the general public are the priority.

Due to COVID-19’s wide-ranging effects, a landlord may get different types of information provided by tenants requesting rent deferment (some due to job loss, some for health reasons, some both). Thus, it is important to develop uniform guidelines in terms of the type of payment arrangements you want to offer to avoid potential fair housing issues.

It begins with being empathetic and tactful. Listening also goes a long way as people are worried, stressed and a lot of times, just want to have their voices heard.

On the bright side, many states may soon be lifting their Stay at Home Orders and so asking a tenant when they anticipate going back to work is a perfectly appropriate question. While continuing to be polite, a discussion as to whether an individual is receiving additional unemployment benefits is also suitable. After all, the purpose of these added benefits was to help pay for vital necessities such as food and rent.

It is important to maintain good records, especially making a log of the attempts to contact a tenant. Just be mindful to make sure to adhere to state social distancing and other guidelines regarding making contact with others.

It is also extremely important that you understand if your properties are affected by any State Emergency Orders or the Federal CARES Act. The latter imposes a temporary moratorium on evictions through July 25, 2020 for any housing receiving federal funds (such as subsidized housing) and for any housing with an underlying mortgage that is federally backed.

The Coronavirus is taking its toll on everyone. For landlords and tenants, communication is key. It should always be done in a respectful manner, but don’t be hesitant to ask questions to gauge an individual’s ability to make payments. Enter into agreements verses verbal arrangements when applicable and make sure you are ready for when the courts re-open to enforce your rights and protect your interests.

If you need assistance or would like to get help from a property management company, Rental Management One is on standby for your call.

HUD tackles websites selling “Worthless” ESA documents

The U.S. Department of Housing and Urban Development (HUD) Secretary Ben Carson is seeking action against online companies that profit from selling false assistance animal documentation.

In a letter sent to U.S. Federal Trade Commission Chairman Joseph J. Simons and Director of the Bureau of Consumer Protection Andrew Smith, Secretary Carson expresses several concerns in line with those of the property management industry and asks the Federal Trade Commission to investigate some websites selling assistance animal verification documents. As HUD General Counsel Paul Compton states, “These websites are using questionable business practices that exploit consumers, prejudice the legal rights of individuals with disabilities, dupe landlords, and generally interfere with good faith efforts to comply with the requirements of the Fair Housing Act.”

This announcement should not interfere with an applicant or resident’s right to ask for an accommodation for an assistance animal, remember rental housing providers have the right to request reliable documentation when the disability or disability-related need is not readily apparent. We will await further guidance from HUD before altering any policies or procedures for evaluating reasonable accommodation requests but this news is encouraging.

70 Sample Questions To Ask A Property Manager

A very important part of being a landlord is the property management side. Property managers are a HUGE and amazing asset. The thing to remember when finding a property manager is not everyone is created equally. You want someone you can trust not only with your asset or liability, but also with your money.

Below is a list of 70 questions to ask a potential property manager.

Note: Many of these questions can be solved by examining the lease/property management contract first.

1. Will I have one specific property manager? Who will be my property manager?

2. Who is the head of the office?

3. How long have you been a property manager?

4. How many units do you manage?

5. What is the average length that clients stay with you?

6. Do you just manage or do you sell too?

7. What do you offer that sets you apart from other companies?

8. What do you expect from me as the owner?

9. How often do you communicate with the home owners?

10. Do you provide the owner’s information to the tenant?

11. Do you have a policy about landlords contacting the tenants?

12. Do you have a requirement for your property management clients to use you? Do you charge if the tenant decides to buy the house?

13. How often do you reach out to the owners? Can you give me examples of how and when you would communicate various problems?

14. What is your turn around time on phone calls and emails from owners?

15. What is your Monthly Charge?

16. Who is the lease between?

17. Do you provide a copy of the lease to the owner and when?

18. How long of lease do you do?

19. Do you charge extra for month-to-month lease?

20. Do you do a break-out clause?

21. Do you offer a reverse military clause?

22. Do you have a rental deductible?

23. Do you have lease language that requires the tenant to pay for any damage they cause that is not wear and tear?

24. Do you trouble shoot with your tenants when they call for repairs?

25. Do you do site unseen leases? If yes, do you have a special addendum?

26. Who pays for pest control?

27. Do they do as/is Appliances?

28. How much notice do you require at the end?

29. Is the lease automatically renewable?

30. What is your renewal policy?

31. Do you charge for renewals?

32. Do you do a market evaluation every renewal?

33. How do you determine to raise the rent or keep it the same?

34. What does the monthly fee include?

35. Do you have any additional charges or fees (pet, placement, maintenance, etc), IE what does my monthly charge not cover?

36. Who keeps the fees that the tenants pay?

37. How is the money dispersed?

38. When is the money dispersed?

39. What is your advertising strategy?

40. What rental price do you recommend?

41. Do you recommend any work to be done to get top dollar?

42. How long do you think it will take to rent out?

43. How quickly do you schedule showing/return calls?

44. How quickly does it take you to approve and have a lease signed?

45. What is your schedule for payments when installing a tenant?

46. Do you have a termination clause if it is not rented after so many months?

47. Do you have a trial period?

48. Do I pay any fees when the place is empty?

49. What is your termination policy?

50. What is your late policy?

51. What is your late fee amount?

52. Who keeps the late fees?

53. If fees are not collected from the tenant will you still charge the owner for them?

54. How many “late” payments does it take to have a fee assessed?

55. How many eviction have you had last month?

56. How do you handle eviction process?

57. Is the eviction part of the cost or is it additional cost?

58. What is your application and screening process?

59. What is your screening requirements?

60. Do you run it by me before you approve them?

61. What do you charge for your application process?

62. What form do you use for the move in/move out inspection?

63. Do you take video or pictures? What is your criteria for what you put down on the forms?

64. How often do you do inspections during a tenant’s term?

65. How do you document the inspection and do you send it to the landlords?

66. How do they handle the security deposit (i.e. do they hold it or do you, the landlord)?

67. How do you charge for tenant’s damage during their lease term?

68. If there are damages upon move out who does the accounting (you or the owner)?

64. If the tenant has damages that exceed the security deposit do you come up with the documents and pursue the tenant?

65. When do you return the security deposit? Do you get approval from the landlord first?

66. What is your maintenance minimum/policy?

67. Do you charge for an additional fee for maintenance?

68. What do you consider emergencies What is their definition of an emergency? (heater out, etc.)

69. Do you ask permission or just fix and bill?

70. Do you show the house while the current tenant is in the home?

So now that you have some sample interview questions, you will be equipped with things to ask your property manager. Any professional company is going to be happy to sit down with you and provide answers to your questions.

For more information on property management services in Michigan, check out http://www.rentalmanagementone.com.


5 Property Upgrades That Maximize Your Property’s Rent

Whether you own a condominium, townhouse, duplex or single-family home maximizing your income is always a high priority for an investor. Implementing a good year-round maintenance checklist is a great way to protect your investment, lengthen the life of your HVAC unit and ensure your renter hasn’t damaged the property, but it won’t necessarily get you top dollar when competing against other properties on the rental market.

Your tenant has moved out and now your property is vacant. Before you do the typical make ready projects, put some thought into rental property upgrades. The standard is to slap some paint on the walls, give it a good detailed cleaning and shampoo the carpets. However, doing the minimum will usually lead to minimal returns in terms of money and time of tenant occupancy.

When dealing with your rental property, there are three goals every investor looking to grow their portfolio should desire to achieve

  • Maximum rent
  • Minimize operating expenses
  • Increase the resale value

In order to get the best return on your investment, stay at the high end of the rental rates, improve your property value and avoid tenant turnover every lease term, you will need to invest in the right upgrades: upgrades that will entice tenants to stay through multiple lease cycles. As long as your rental home is structurally sound and in good condition, then you only need to add a few upgrades to make your home stand out. These upgrades will set your listing apart from others sitting on the market and getting it rented faster saves you money upfront.

To appeal to a renter you have to look at your property from their standpoint. Location is always key and a big factor when renters are searching for a home. Aside from that you’ll need to take a closer look at what features or upgrades will make a renter pay more money, stay longer and take excellent care of the property.

We will cover the top 5 upgrades renters are looking for in a rental property and are willing to stretch their budget to get.


Curb Appeal

When you drive through a typical neighborhood subdivision you can normally separate the homeowners from the renters pretty quickly. It all starts at the curb, the first impression of a home and a spot most investors neglect, is the exterior curb appeal.

Many investors forgo the much needed coat of paint, leave a dilapidated fence up, forget to power wash the driveway and fail to plant flowers or groom trees/shrubs. This is not a good sign to a renter and a potential reflection of how they see your maintenance style.

Yes, this goes for condos, townhomes and high-rises too. Single-family homes are not the only places where curb appeal is taken into consideration. Yes in condos and townhouses some property maintenance is out of your hands but you do have the power to complain and vote. You have a duty and obligation to ensure your monthly HOA dues are put to good use and that the board of directors is allocating enough funds for exterior maintenance. Driveways should be free of potholes, the landscaping should be well maintained, all areas of the property should have ample lighting and all fences working properly.

Additionally, there are a few things you can do to spruce up your exterior curb appeal even in a condo or townhome. Make sure all balcony and patio space is functional and safe. For unsightly patios add green turf and make sure there are no overgrown weeds. You might even add a patio table or extra lighting. Make sure your front door is painted and weather stripped and make sure all exterior storage is clean and usable.




Appliances, appliances, appliances are among the first things a renter usually looks at after entering a potential new home. In some cases it’s just as important as the location. Old, half functioning and mismatched appliances will not get you top dollar. They can also lead to more hassle down the road in the form of unending maintenance calls. Band aiding a problem or temporary fix, always costs more money in the long run. Invest in a good, high quality, matching appliance package and make sure it has a warranty. If your home is setup with washer/dryer connections you can always add a set to further increase the value of your rental property.

Kitchen 3


Upgraded countertops really add value to your kitchen and appeal to renters willing to pay more for upgrades. There are so many options to choose from that will add value and style. Cement and quartz are popular in the higher end markets but a good choice is always granite. Invest in durability, functionality and a style that will stand the test of time.

With cabinets sometimes a fresh coat of paint and new fixtures will go a long way. However, if you have the old particle board cabinets that have outlived their usefulness, then you should upgrade to a more modern and functional option. Remember storage space is a hot commodity and an appealing bonus to a rental property.

living room flooring.jpg


This is a big one and also a tricky one because everyone has an opinion and you won’t please all potential renters. It’s the battle of carpet vs. wood flooring and in the end, wood flooring always wins. For this purpose we are lumping all flooring together: laminate, hardwood, bamboo, plank and faux wood. The options range from reasonable to pricey but all flooring immediately raises the value and rent in a rental property.

Carpet is one of those items that may have to be changed out every other renter and that is expensive and has a negative impact on your annual rate of return. One Kool-aide stain or bleach spill can ruin a new carpet forever. However, some tenants like carpet, especially in their bedrooms and during winter. On the other hand the majority of renters may have a carpet allergy or a child with carpet allergies.

Some owners opt for a mix of the two by putting carpet in the bedrooms and flooring throughout. Others opt for a blend of wood flooring and ceramic tile. You most definitely should get rid of old vinyl or linoleum flooring in bathrooms and kitchens. It is unsightly and usually lower quality than ceramic or travertine tile and a major turnoff for renters.

dining room


Investing in higher quality light fixtures, adding new ceiling fans, upgrading all faucets (kitchen – bathroom), will give the rental property a more polished pulled together look. It will also give the normal wear and tear items higher durability if you purchase a quality brand. Tenants even notice door handles, locks, and window blinds. Spending a few dollars more to get the nicer 2 inch wood or even faux wood (painted or unpainted) blinds really adds a more lavish touch.

The benefits of adding rental property upgrades extends beyond appearances. Investing in better quality upgrades not only will maximize your rent, it will improve your annual cap rate or rate of return, improve your home’s value and the majority of the expenses will be tax deductible. Most importantly, it will allow you to develop a healthy, legal relationship with your tenants. When competing in an active rental market you need your property to stand out above other properties listed for rent. Quality upgrades done professionally will get your rental property filled faster and maximize the income on your rental investment.

If you need assistance with upgrading your rental property and professional management, go to http://www.rentalmanagementone.com.


Original Article written By: Ray Wei,  https://www.onerent.co/property-management/5-important-property-upgrades-that-maximize-your-rent-rate/

Municipalities Can No Longer Invade Tenant Space

Governor Snyder signed Senate Bill 107 into law on November 28, 2017.  The bill, popularly called the “Tenant Permission Bill,” was promoted by the Rental Property Owners Association of Michigan (RPOA-M), Apartment Association of Michigan (AAM) and the local Rental Property Owners Association in Grand Rapids (RPOA).  The law, now Public Act 169 of 2017, will take effect 90 days from the Governor’s signature which is February 26, 2018.  The law changes various aspects of the Housing Law of Michigan rental inspection enforcement regulations.

 The most prominent change under the new law is the removal of the right of a municipality to enter a rental premise for an inspection—without the tenant’s permission–under the landlord’s contractual right within a lease to enter the premises.  Several U.S. courts, including the Supreme Court, have ruled time and time again that municipalities must obtain permission from a tenant before entering their unit for a rental inspection, except in cases of an emergency.  This new law will now require municipalities to obtain permission or an administrative warrant or wait until the unit is vacant before entering for an inspection.

 Specifically, the new law requires a tenant to allow a municipality entry in the following situations:

·                   The lease authorizes an enforcing agency inspector to enter the leasehold for an inspection. (A clause in the lease must specifically state that the tenant agrees to allow the enforcing agency inspector to enter the premises for a municipal rental inspection.)

·                   The lessee has made a complaint to the enforcing agency.

·                   The enforcing agency serves an administrative warrant ordering the lessee to provide access.

·                   The lessee has given consent.

What about units where there are more than one tenant/leasee?  Requesting and receiving permission from one leasee satisfies the permission for the entry requirement.

 What about a landlord’s rights?  The same Federal courts which have ruled that tenants must give permission have also ruled that municipalities have a right to carry out rental inspections for health and safety purposes and may enter a unit if the tenant gives permission—with or without the consent of the landlord.

 Under the previous and new modified Housing Law, landlords must, in good faith, seek to obtain permission of the tenant for a municipal inspection.  Landlords are not allowed to discourage, in any way, a tenant’s choice to allow entry.  Doing so could endanger the landlord’s protections under the law.  This does not, however, mean that a landlord cannot inform the tenant of their right to refuse the inspection.

The law also includes two very important protections for the tenant and the landlord, namely that neither the tenant nor the landlord can be discriminated against for the tenant exercising their right to refuse an inspection.  For the tenant this means the municipality can’t threaten the tenant with condemnation of their rental unit or otherwise fine the tenant for refusal of entry.  For the landlord, this means that the municipality cannot condemn the property, remove a certificate of compliance or otherwise charge a fee or fine for the tenant’s refusal of entry if the landlord has fulfilled their obligations under the other parts of the law.

 So, when do landlords have to allow the municipality entry?  Here are specific circumstances under the new law when a landlord must provide entry:

 ·                   The lease authorizes an enforcing agency inspector to enter the leasehold for an inspection. (A clause in the lease must specifically state that the tenant agrees to allow the enforcing agency inspector to enter the premises for a municipal rental inspection.)

·                   The lessee has made a complaint to the enforcing agency.

·                   The leasehold is vacant.

·                   The enforcing agency serves an administrative warrant ordering the owner to provide access.

·                   In cases of an emergency.

 The changes to the law were necessary to protect tenants from aggressive municipal tactics that used threats of eviction and more to enter a rental premise—all of which were contrary to the rights of all citizens under the 4th Amendment of the U.S. Constitution.

Clay Powell, Director of the RPOA-M and RPOA, stated that it has taken nearly four years to get these changes made and wishes to thank all the legislators that were involved along the way to make the changes reality and bring Michigan into compliance with Federal Law.

As always, except in cases of an emergency, a landlord/property manager must give tenants a 24-hour notice before entry.

Property Owners and Tax Time

The key to saving money on your tax return is to take advantage of the many deductions offered to full-time rental property owners. Your property is considered a full-time rental if you allocate fewer than 15 days for personal use.

Some of the most basic deductions that landlords could easily overlook are costs related to cleaning and maintenance, property taxes, management fees, mortgage interest, advertising, and even property insurance.

Want to save even more money? You can also deduct expenses related to traveling to manage your property, depreciation of your property, HOA fees, insurance claim deductibles, operating expenses, and even your utilities. Basically, any cost you incur to keep your rental property up and running can be filed as a tax deductible expense.

If your rental property expenses exceeded your rental earnings, you can even deduct your losses. If your annual income (adjusted gross income) is below $100,000, you are eligible to deduct up to $25,000 of your rental losses. As your annual income increases, the rental loss deduction is reduced.

One of the best tips any landlord could get is to keep meticulous records or better yet, hire a professional property manager to keep these records for you. You must treat your rental property like a business. The more expenses that you document, the better chance you have to get those tax deductions and keep more of your money. Rental Management One provides detailed expenses reports and even copies of expense receipts for our Owners to turn into their CPA making this important task a “non-stress” related task.

New to the Rental Game

With the popularity of travel websites such as Airbnb, many people are interested in the opportunity to turn their primary and/or secondary home into a money making property, which is a great idea I might add. The good news is, for rental experts and noobs alike, you can dramatically benefit by adding a professional property manager to your business team. The cost is low but the value is worth every penny. Call Rental Management One at 248-208-3882 and start getting the most money out of your rental property.