by Jim the Realtor | Feb 16, 2024 | Landlords and Tenants
In the apartment leasing process, landlords require applicants to provide proof of identity, employment and income before granting approval. Traditionally, those would be printed and either mailed to a leasing office or handed over in person.
Since the pandemic, more apartment leasing is done online, with renters signing for apartments without even visiting the building. But as online leasing platforms have proliferated, so have scams designed to take advantage of them, industry experts said.
Reported internet-based real estate crimes have risen from $213M in 2020 to $350M in 2021 to $397M last year, according to the FBI’s internet crime reports.
Those crimes include renter fraud, as well as other forms of real estate scams. An FBI spokesperson said the bureau doesn’t investigate these types of crimes, and landlords have expressed frustration that state and local law enforcement officials have been slow or unwilling to respond to the rise in fraud.
The surge in this type of crime has come as apartment operators have pushed the leasing process to online platforms, meaning renters rarely come face-to-face with a property manager, making it easier to pass off fake IDs. In 2022, 23% of renters took zero in-person tours before signing a lease, 69% submitted their applications online and 36% signed their lease electronically, according to Zillow.
“With the advancements of online document-editing technology, it means that really, anybody can do it,” said Daniel Berlind, the CEO of multifamily application verification service Snappt. “If you think about the process and the technologies available to fraudsters five and 10 years ago, manipulating a bank statement, a pay stub … really any financial document would have required a pretty high level of skill.”
Prospective renters use documents such as doctored W2s, faked employment verifications and fake or stolen identities to skirt the screening process and get approval. Renters who submit fraudulent documents during the rental applications are seven times more likely to end up in eviction proceedings, Berlind said.
While widespread, the practice is especially common in a handful of major metropolitan areas, such as Atlanta, Houston, Charlotte, Los Angeles and suburban Dallas, Berlind said.
A New York comedian went viral earlier this year with a clip explaining how she used Adobe Photoshop to alter her pay stubs and bank statements to afford to rent an apartment on her own. She later backtracked those comments and said, “To be clear, I was joking,” the Daily Dot reported.
But the social media landscape is rife with people who aren’t joking about how to commit application fraud.
Pages like Fresh Documents and Hart2Hart Entertainment, Kivysaptapprovals on TikTok, CyberCredible on X, and the ApartmentHacks subreddit — which now threatens to ban any members that talk about faking pay stubs — all offer suggestions and products to create new financial forms and other information for customers to get around a credit check, according to Snappt, which helps landlords identify fraudulent applicants.
“There are entire online communities that collaborate to discuss fraud,” said Berlind, who runs Snappt as well as his own real estate firm, Berlind Properties. “There are videos on TikTok that have millions of views, showing how to edit documents. There are entire forums on Reddit that discuss properties and lease-up, what their concessions are and literally give walkthrough guidance to would-be fraudulent applicants and how they can circumvent the process.”
Link to Article
by Jim the Realtor | Nov 10, 2023 | Landlords and Tenants
In almost every country, the government strongly encourages investing in real estate by offering tax credits and deductions. Investors who use these incentives reduce their taxes, freeing up cash to invest and build wealth.
Here are the top ten tax credits and deductions that can help you maximize rental property profits.
1. TAKE THE HOME OFFICE DEDUCTION
Unlike W-2 employees who burn the midnight oil from home, business owners may deduct the expenses associated with having a home office from their taxes. Yet far too many people fail to take this deduction. Work with a CPA who will help you use and document your home office expenses correctly so you don’t miss out.
2. DEDUCT YOUR TRAVEL EXPENSES
Once you’ve established that your primary office is at home, your deductible travel expenses will increase significantly. Whether you’re driving locally to meet with tenants, check on properties, oversee maintenance, or flying across the country to manage a far-flung portfolio and/or search for a new property, business travel is a significant deduction.
3. INCLUDE ALL OF YOUR VEHICLE EXPENSES
This category is a little complex, so it deserves a place on the list separate from travel expenses. If you use your vehicle for rental activities, such as driving to your properties or picking up supplies, you can claim either the standard mileage rate or actual expenses like gas, maintenance and depreciation. Work with your CPA to determine which is better for you.
4. DON’T SKIMP ON PROPERTY MARKETING
Advertising is crucial to attracting tenants. Any money you spend on marketing your rental properties, such as online listings, brochures, etc., is fully deductible.
5. DEDUCT ANY MANAGEMENT FEES
If you hire a property manager to handle day-to-day operations, their fees can be deducted. This also applies to fees paid to attorneys, accountants and other professionals related to your rental business.
6. USE COST SEGREGATION AND BONUS DEPRECIATION
I speak with a lot of real estate investors every year, and I continue to be shocked by how many people avoid a cost segregation analysis because someone told them it would get them flagged for an IRS audit. This is terrible advice (and often a sign the investor needs a new CPA). Cost segregation, coupled with bonus depreciation, is the correct way to depreciate your investment — saving you a ton on taxes.
7. DEDUCT YOUR PASSIVE LOSSES
While no one likes losses, losses on an apartment rental can offset other income, reducing your overall tax bill. Typically, rental real estate losses are considered passive and must offset other passive income. If your only other sources of income are active, don’t throw in the towel on this item. Work with your tax advisor to see how to restructure your active income to create passive income.
8. ADD ELECTRIC VEHICLE CHARGING STATIONS
Governments offer substantial incentives to people willing to help build infrastructure to support switching from gas to electric vehicles. If you qualify for these tax credits, it’s an excellent opportunity to get the government to help pay for an upgrade to your property that will help you appeal to tenants who drive EVs.
9. INSTALL A SOLAR POWER SYSTEM
Like charging stations, solar systems come with great tax incentives right now. The federal investment tax credit for solar systems is 30% through 2032, and bonus depreciation is still available. Use these incentives to get the government to help pay for another property upgrade.
10. HIRE YOUR KIDS
Rental properties need a lot of regular, unskilled maintenance. Hiring your teenage children to handle basic landscaping, snow removal and other tasks can be a great solution. You’ll deduct the expense of the wages you pay them, and they’ll earn money that’s taxed at a lower rate than yours. Who knows? You could inspire your kids with a love of real estate, just like my mom and dad did.
TOM WHEELWRIGHT®, CPA
CEO
WealthAbility
Tax and wealth expert Tom Wheelwright® is a CPA, CEO of WealthAbility®, Rich Dad Advisor, entrepreneur, international speaker, and author of the bestselling books The Win-Win Wealth Strategy and Tax-Free Wealth. Wheelwright is the CPA for Robert Kiyosaki and has spoken on stage on six continents to over 100,000 entrepreneurs, small business owners and investors. He also is the host of two popular podcasts: The WealthAbility® Show with Tom Wheelwright® CPA and The WealthAbility® for CPAs Show.
by Jim the Realtor | Nov 2, 2023 | Landlords and Tenants
When tenants live in a property, they cause some degree of wear and tear. This can range from minimal scuffs on walls to more serious harm, such as stained carpets or broken appliances. It’s important to recognize that wear and tear is different from intentional damage or neglect by the tenants.
Landlords must think about factors like tenancy length, number of occupants, and property condition before the tenant moved in to decide what counts as normal wear and tear. A well-maintained property will get less wear and tear compared to one that has been neglected.
Here are frequently asked questions:
FAQ 1: What is wear and tear? It is the gradual deterioration of a property as a result of normal everyday use by tenants. It includes minor damages, deterioration, and natural aging of the property. Landlords cannot hold tenants responsible for the cost of repairing or replacing items due to normal wear and tear.
FAQ 2: How can landlords differentiate between degradation and tenant damage? Landlords should consider the overall condition of the property, the age of the item in question, and the length of the tenancy. Minor scuffs and marks are usually considered wear and tear, while significant damage caused by negligence or abuse is considered tenant damage.
FAQ 3: Can landlords deduct the cost of wear and tear from the security deposit? No. Security deposits are intended to cover intentional damages or neglect by tenants that go beyond normal use. Calculate depreciation to claim the correct amount from security deposits.
FAQ 4: How can landlords protect themselves? It is highly recommended for landlords to conduct a thorough move-in inspection with photographs will help in accurately determining any additional damages caused by the new tenant during their stay. Do an additional move-out inspection with photos when they leave.
FAQ 5: What can landlords do to prevent excessive wear and tear? Landlords can take several measures, such as, 1) regularly conducting property inspections, 2) providing clear guidelines on maintenance and care – especially for specific features of the property, such as hardwood floors or countertops, 3) promptly addressing repair requests, and 4) using durable and easy-to-maintain materials in the property.
Educating tenants about proper maintenance practices can help prevent unnecessary wear and tear too!
by Jim the Realtor | Oct 20, 2023 | Landlords and Tenants
In 2019, the state legislature passed a bill that had two profound impacts:
- It prohibits an owner of residential real property from terminating a tenancy without just cause.
- It also prohibits an owner of residential real property from, over the course of any 12-month period, increasing the gross rental rate for a dwelling or unit more than 5% plus the percentage change in the cost of living, as defined, or 10%, whichever is lower, of the lowest gross rental rate charged for the immediately preceding 12 months, subject to specified conditions.
As you probably suspected from the title, these are more of the tenant-friendly laws that prevail in California! If this is the last straw and you’re ready to sell your rental property, contact me today!
Click here for the full details of the bill:
https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB1482
by Jim the Realtor | Oct 11, 2023 | Landlords and Tenants
The Housing and Urban Development has frequently asked questions and answers for those seeking clarification when a tenant presents a request for a support animal. They are not a pet – it is an animal that works, provides assistance, or performs tasks for the benefit of a person with a disability, or that provides emotional support that alleviates one or more identified effects of a person’s disability.
What Is an Assistance Animal?
An assistance animal is an animal that works, provides assistance, or performs tasks for the benefit of a person with a disability, or that provides emotional support that alleviates one or more identified effects of a person’s disability. An assistance animal is not a pet.
Obligations of Housing Providers
Individuals with a disability may request to keep an assistance animal as a reasonable accommodation to a housing provider’s pet restrictions.
Housing providers cannot refuse to make reasonable accommodations in rules, policies, practices, or services when such accommodations may be necessary to afford a person with a disability the equal opportunity to use and enjoy a dwelling.
The Fair Housing Act requires a housing provider to allow a reasonable accommodation involving an assistance animal in situations that meet all the following conditions:
- A request was made to the housing provider by or for a person with a disability
- The request was supported by reliable disability-related information, if the disability and the disability-related need for the animal were not apparent and the housing provider requested such information, and
- The housing provider has not demonstrated that:
- Granting the request would impose an undue financial and administrative burden on the housing provider
- The request would fundamentally alter the essential nature of the housing provider’s operations
- The specific assistance animal in question would pose a direct threat to the health or safety of others despite any other reasonable accommodations that could eliminate or reduce the threat
- The request would not result in significant physical damage to the property of others despite any other reasonable accommodations that could eliminate or reduce the physical damage
Examples
A reasonable accommodation request for an assistance animal may include, for example:
- A request to live with an assistance animal at a property where a housing provider has a no-pets policy or
- A request to waive a pet deposit, fee, or other rule as to an assistance animal.
Click here for the full FAQs:
https://www.hud.gov/program_offices/fair_housing_equal_opp/assistance_animals
