Tag: Real Estate

6 Landlord To-Do’s: Preparing for a New Tenant

https://www.pexels.com/photo/building-metal-house-architecture-101808/Having been landlords for several years, my husband and I find ourselves fortunate to have had tenants who have taken care of our home as if it were their own.  We are hopeful, like many homeowners, that our investment property will appreciate in value.  Each year we get a bit anxious around the time our tenants’ lease is almost up and the idea of having to find a new tenant may be a reality.  In anticipation of such an event, I began to put together information that would help if such a situation should arise.

Looking back, I owe much of my experience in property management – working with tenants, maintenance staff, managing budgets, upholding policies – to my experience working in Housing and Residential Life.  As an undergraduate at the University of San Francisco, I was a Resident Adviser running a living & learning community with a $40K budget.  During my graduate studies at the University of Minnesota, I participated in the College Student Personnel Administration Program. In addition to a full academic load, my grad assistantship included being a Faculty Adviser, a Residence Director of 735 residents during my first year and 141 residents the following year.  Let’s just say I didn’t get much sleep when I was in grad school.

Little did I know that my experience in Housing & Residential Life would help prepare me as a homeowner and landlord.  In this week’s blog post, we’ll take a look at preparing for a new tenant.  I discovered a number of SmartDraw templates to help in the process.



In addition to posting photos of the property on the appropriate sites, you may also choose to include a floor plan or layout of the home.   As the original owner of the home, I was able to reference the brochure of the unit to create this particular floor plan.

Condo Floor Plan_8.31

SmartDraw Tip: In the Left Panel, navigate to the Floor Plans – Residential Category.  Select the appropriate room outline from which to begin.  

If an applicant expresses concerns about safety and security, you may also choose to provide a detailed emergency evacuation plan.

Emergency Condo Floor Plan

SmartDraw Tip: Since the floor plan was already created, the evacuation floor plan was easily created with the addition of emergency related symbols and labels.  If you’d like to learn more about SmartDraw’s Emergency & Disaster Planning templates you may want to read a few of our recent posts: Protect Your Family: Create a Family Emergency Plan, Do You Have an Emergency Evacuation Plan?, and HAZMAT Response Team Harnesses the Power of SmartDraw


It’s important to be consistent and treat each potential tenant or applicant the same so that you’re not in violation of any of the fair housing laws.  At minimum, you should have every potential tenant submit a rental application and a credit report & criminal history check authorization form.

Prior to showing the property, it’s important to find out how serious a potential tenant is about renting and if it’s worth your time scheduling an on-site visit.  Here are a series of questions to consider asking the applicant:

  • Why are you planning on moving?
  • When would you like to move?
  • What is your monthly income?
  • Can you provide me with references from your former landlord and employer?
  • Will you complete a rental application and a credit & background check form?
  • How many people will be living in the home?

Rental Application

SmartDraw Tip: Navigate to the Forms Category in the Left Panel.  The Rental Agreement can be found in the application Forms Sub-Category. 


Review the lease agreement with the tenant(s) section by section so that they completely understand what they are agreeing to.  Once you have gone over the entire agreement with the tenant and answered any questions, you and the tenant should sign and date the lease.


You should always collect the first month’s rent and the entire security deposit before the tenant moves into the unit. If the tenant does not pay on time the first month, it increases the likelihood that they will be late with their rental payments the following months.


Upon receipt of the keys to the property or the actual move-in day, you should go over the move-in checklist with the tenant. The checklist describes the condition of the property as a whole and of each room in detail. Both you and your tenant should sign and date this checklist.

The move-in checklist is important as it allows you to compare the condition of the property when the tenant moves in to the property’s condition when the tenant.  The Rental Property Condition Form, found in SmartDraw, is similar to the move-in checklist I had originally created.

Rental Property Condition Form

SmartDraw Tip: Navigate to the Forms Category in the Left Panel.  The Rental Property Condition Form can be found in the Miscellaneous Sub-Category.


Finally, you should provide the tenant with your contact information. This will be the method of communication which allows them to reach you if they have a question or complaint. Ensure they know if you prefer to have them contact you during normal business hours, 9 A.M. to 5 P.M., unless it is an emergency.  It is at this early stage in the tenant-landlord relationship that you are able to establish a healthy working relationship.

1031 Exchanges are Complicated. Explaining Them Doesn’t Have to Be.

Purchased Image iStock_000002765246MediumLike a lot of information in the business world, a Section 1031 Exchange is complex. But it can be made a lot easier to understand and digest when presented in a visual way.

1031-exchange-photoPretty much anything can.

You say you don’t believe it? You say, “I’m from Missouri… show me!”?

Okay, fair enough. Allow me to present a rather complex example: a Section 1031 tax-deferred exchange.

What is a Section 1031 Exchange?

It used to be called a Starker exchange. The term came from the 1979 case Starker v. United States in which an investor challenged an IRS ruling against his non-simultaneous real estate exchange and won. This led to Section 1031 being added to the Internal Revenue Code, which now provides an extensive set of rules for tax-deferred property exchanges.

Section 1031 Exchange Rules Explained Visually

There are a lot of rules and timelines involved in a 1031 exchange. All are important. But rather than give you a long, dry laundry list, here’s an infographic that presents the key points visually.


A Brief History and Explanation of the 1031 Tax-Deferred Exchange

Back in the old days, we called it a Starker. Today, it’s more commonly called a Section 1031 exchange.

But don’t get hung up on the name. Because whatever you call it, it’s a great way for real estate investors to defer taxable gains when selling business or investment property. When properly executed, the seller (taxpayer) can defer all of the gain in his or her transaction by moving it into a newly acquired property.

It’s important to know that this is not a “tax-free” exchange. Your gain still exists. But a 1031 exchange allows you to defer the obligation to pay any tax liability until you sell the new property at some future date. (Or, you may decide to exchange and defer again.)

The beauty of it is that instead of paying taxes with a chunk of your profits, you can leverage all of your proceeds into a larger investment with more income and appreciation potential.

If you’re thinking about entering into a Section 1031 exchange, do your homework. I’ve done a lot of studying on this topic because I have been involved in a few of them myself. It is absolutely crucial that you follow all the rules and meet all the timelines.

The Meaning of “Like-Kind” and How a 1031 Exchange is Accomplished

While it can be used in the exchange of any type of “like-kind” property, the most common application of a 1031 is for business and investment real estate. “Like-kind” is a fairly broad term covering all types of investment property. It doesn’t limit you to exchanging your rental house only for another rental house, for example. You may exchange it for an office building, warehouse, or other investment property.

It also allows transactions to happen non-simultaneously. This means you don’t have to find someone willing to swap properties with you. The 1031 Exchange Rules allow you to sell your property, and then buy any like-kind replacement property you choose, without needing to do a direct trade. The key is that you must use a Qualified Intermediary. This person (or company, also known as an accommodator) acts as a liaison. They collect the proceeds from your sale, hold them in escrow, and then use them to buy the replacement property you designate.

About the 1031 Exchange Infographic

Now, I’m no graphics whiz. This took me about two hours to put together using SmartDraw CI. I could probably have used prettier pictures, but I just used clip art images from the SmartDraw library to keep it simple. If you haven’t tried our infographics feature yet, what’s keeping you? Come on, give it a go!

15 Things You Absolutely Have to Know Before Buying a House

https://pixabay.com/en/architecture-family-house-front-yard-1836070/The US housing market is officially in full recovery. How do I know this? Well, just take a look at a few headlines:

2014 Housing Outlook: Home Prices Head Higher” – Kiplinger

I Wasn’t Going to Buy This House Until I Saw the Realtor’s Headshot on the Sign” – The Onion

Housing Recovery Seems Still on Track” – New York Times

Looks like it’s time to go house hunting. Even Forbes is touting the housing recovery. Check out its list of best cities for investing in housing in this infographic.

Top 20 US Housing Markets 2014

Here are a couple more headlines:

Higher Interest Rates Will Slow Housing Market Growth in 2014” – Washington Post

Hold on there… What was that?

The Housing Market is Still a Drag on the Economy—But Why?” Los Angeles Times

Hey, wait a minute. I thought I was buying a house. What happened to the housing recovery?

Not to worry. Here are 15 things you absolutely, positively have to know if you’re buying a house—whether it’s in 2014 or years from now, housing recovery or not.

  1. Don’t pay attention to the national news media.This doesn’t just go for buying a house; this is a generally good idea.
  2. Don’t pay attention to Realtor® ads. “Now is the time to buy” is their pitch. This isn’t financial advice, this is marketing. Understand their motivation. They have to sell houses to make a living. Don’t get me wrong—I would never buy or sell a house without a Realtor®. They are very good at this. Use them to sell your house (or to help you buy… after you read this post in its entirety). But do not use them for financial advice.
  3. Don’t pay attention to people who say “a home is an investment.” If you’re buying a house to live in, then it’s not an investment. It’s a home. Buy it because you love it and want to live there and, above all, can afford it. If it goes up in value and you end up with a ton of equity… Yahtzee!
  4. Consider the costs of owning versus renting. In some cities (like here in San Diego), you can rent a house for half or less what it would cost you to own it. Or, conversely, you can probably rent something larger or in a ritzier neighborhood than you can afford to buy.
  5. Consider ALL of the costs of owning versus renting. The landlord isn’t going to fix that leaky roof or broken vanity or mow the grass or trim the trees for you any longer. Make sure you factor in costs of maintenance, repairs and replacement (and some of the things you’ll have to replace are expensive – like roofs and furnaces and windows, oh my!).
  6. Consider the benefits of owning versus renting. There are some really good things about owning. No landlord to deal with. No more rental rate increases. Want to paint the walls or do a kitchen remodel and replace the dishwasher that sounds like a 747 taking off? Want to yell at the kids to get off your lawn? Go ahead… it’s your lawn.
  7. Does the price seem too good to be true? That bargain-basement price may look enticing, but tread carefully. Chances are it’s priced low for a reason… or for many reasons. Do your homework before buying. Only TV house flippers buy cheap broken-down houses sight unseen, compound problems with a boatload of bad decisions, and then make a whopping profit at the end of the show. See No. 11 below.
  8. You’ve heard the expression, “location, location, location?” Best real estate expression ever. Pay attention to it, because it’s true. Good neighborhoods tend to stay good or get better. Bad neighborhoods get worse. Don’t buy in a declining neighborhood, no matter how good the price looks.
  9. Never, ever, ever, buy the biggest or most expensive house in the neighborhood. Unless you’re a gazillionaire like Bill Gates. Then do whatever the hell you want.
  10. Don’t buy just for the “tax advantages.” There are also a lot of costs of owning that aren’t tax-deductible and that you won’t face if you rent.
  11. Let’s talk about house flipping! Those house-flipping shows can be entertaining, but they aren’t telling you all the facts. Trust me—there is absolutely no way people who are that stupid are making money on every deal. It’s really, really hard to make money flipping houses but it’s really, really easy to get burned.
  12. What to do if you don’t have a six-month cash reserve. Here’s what to do if you can’t afford to keep at least six months worth of house payments in a cash reserve: Ready? Here goes: Don’t buy a house!
  13. Famous last words: “If anything goes wrong, at least I have insurance.” Don’t assume all problems will be covered by your homeowner’s insurance policy. Insurance companies put a lot of exclusions in policies. Check these out and understand your coverage… and your risks.
  14. Let’s talk about that nice lady driving you around to look at houses. Did you know that “your” real estate agent may not be working for you? It’s wise to use a real estate agent, but make sure to sign a buyer’s agency agreement (giving you the option to cancel at any time). If you don’t, the Realtor® is most likely working as a subagent of the listing agent, meaning she is working for the seller. It’s not her fault. It’s how agency law works.
  15. Don’t get in over your head. Life is too short to work multiple jobs and get all stressed out over a house you can’t afford to own. If you aren’t sure whether you can afford it, put it off and rent. But don’t overspend on rent, either. In the immortal words of Bobby McFerrin… “Don’t worry, be happy.”