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MICHIGAN

LANDLORD november/december 2013

www.rpoaonline.org

See page 18 for details

A PUBLICATION OF THE RENTAL PROPERTY OWNERS ASSOCIATION


RENTAL PROPERTY OWNERS ASSOCIATION

NON-MEMBER

RPOA MEMBER

N O T I C E O F V I O L AT I O N S

PEACE OF MIND

NON-PAYING

TENANTS

FAIR HOUSING VIOLATIONS COSTLY

EVICTIONS

DESTRUCTIVE

TENANTS

ONGOING POLICE CALLS OTHER COMPLAINING TENANTS NASTY LETTERS FROM NEIGHBORS COSTLY LIABILITY LAWSUITS INCORRECT

FORMS

WHERE LANDLORDS GO FOR HELP 2

www.rpoaonline.org


WHERE LANDLORDS GO FOR HELP

In this Edition

6

14 20

FEATURES 4

From the Director

5 New Members 12 Member-to-Member Discount Program 22 Credit Reporting Procedures 24

Upcoming Seminars & Events

37 Ad-o-Grams

ARTICLES

Volume 49, number 6

6

THE PROCESS OF RENT-TO-OWN HOMES

www.rpoaonline.org

10

THE RESIDENT WHO RAN OUT OF CHECKS

MICHIGAN LANDLORD editorial goal is to provide a forum

11

UTILITIES IN RESIDENT’S NAME

for real estate investment and rental property ownership

14

TENANT’S PIT BULL DOG ATTACKS ANOTHER TENANT

and management ideas and news. Our articles, columns, and other features should not be construed as investment advice, nor does their appearance imply an

20 RULES FOR AVOIDING SOURCE-OF-INCOME DISCRIMINATION

endorsement by the Rental Property Owners Association

30

LANDLORD’S QUARTERS A PLACE FOR LANDLORDS

of any specific real estate investment or management

34

WHY SINGLE FAMILY RENTALS ARE HERE TO STAY

of Kent County or the Real Estate Investors of Michigan strategy. An investor’s and manager’s best course of action must be based on individual circumstances.

36 RPOA MILLIONAIRE MASTERMIND

November/December 2013 MICHIGAN LANDLORD 3


RENTAL PROPERTY OWNERS ASSOCIATION

From the desk of the Director Clay Powell

The holidays are upon us and things are looking good for the economy and real estate investment in the Grand Rapids area and West Michigan. Lots of great things are happening, from the opening of the new Downtown Market to the announced multi-million dollar planned investment by Michigan State University in a new research facility. Foreclosures are down significantly from just a year ago and rentals are still in demand. We are truly blessed to be where we are in Michigan. As they say, great things can happen if you’re in the right place at the right time. Look in this issue for lots of inspiring and helpful wisdom and knowledge. Learn Why Single Family Rentals Are Here to Stay on page 34. Check out the ins and outs of renting to own on page 6. Look for information articles on liability issues, fair housing, and more. We hope you’re enjoying our new magazine format too. Not only are there lots of great things happening all around us, lots of great things are happening at the RPOA too. We are nearly done with our complete overhaul of the RPOA website. We think you’re going to love it! The new tools and resources will make your membership even more valuable. As many have said, it pays to be a member of the RPOA. It’s definitely THE place where landlords go for help! (And, if we haven’t said it lately, thanks for being a member and supporting the services, benefits and lobbying of the organization. We couldn’t do all we do without you!)

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WHERE LANDLORDS GO FOR HELP

Welcome, New Members Brito, Pedro L

Hoekzema, Al & Marilyn

Robinson, Kenneth

Buurma, Roger

John Anthony Real Estate LLC

Rozell, Terri

Coyne, Kevin

Kittell, Anita

Searer, James & Mary

Curtis, Ron & Gerry

Lamancusa, Mike

Turner, John

DeLeon, Lazaro

Lincoln Pines Resort

Vander Griend, Susan

Dodds, Eric

Martin, James A

Well House

Grand Rapids Rent 2 Own Homes LLC

Rees, Jon

Zokoe, Laurie

November/December 2013 MICHIGAN LANDLORD 5


The Process of Rent-to-Own Homes Getting financing is still tough for some buyers. And, some real estate investors prefer not to be long-term landlords. Rent-toown can be the solution for both. Also called a lease-to-own house, the process works similarly to a car lease: Renters pay a certain amount each month to live in the house, and at the end of a set period — generally within three years — they have the option to buy the house. Each month of rent they pay is income for the seller, while a portion of it goes toward a down payment to eventually buy the home. 6


Both renters and sellers need to be very clear about the contract they draw up before they agree to this arrangement. Renting-to-own has advantages and disadvantages for both parties. Buyers who can’t yet afford a house may be able to get one more quickly. Before entering into an agreement, sellers have to decide the sale price and rent they’ll charge for the house. Both amounts are subject to negotiation, just as a regular sale would be. But sellers and buyers need to remember that once they sign an agreement, the sale price of the house is locked in until the end of their rental term, typically between one and three years. Even if other housing prices rise or fall during that time, the original agreed-upon price is final.

Sellers may also charge an option fee and a rent premium. The option fee is a set amount that the renter pays the seller. If, at the end of the lease period, the renter buys the house, the option fee becomes part of the down payment. If the renter doesn’t buy the house, the option fee becomes income for the seller. Rent premiums are an amount slightly above the typical rent, with a portion of that money going toward a down payment. An option fee should not be confused with a “security deposit,” which is something completely different. The contract should be clear on the various payments. continued on page 8

November/December 2013 MICHIGAN LANDLORD 7


RENTAL PROPERTY OWNERS ASSOCIATION

The Process of Rent-to-Own Homes

Risks and Benefits to Buyers For many people, a home will be the biggest purchase they ever make. Both buyers and sellers should carefully weigh their options before agreeing to any binding contract. Let’s look at some advantages and disadvantages for buyers: • Buyers have time to build income and repair their credit history as they rent the house. • Depending on the agreement, renters can walk away if they find something seriously wrong with the house. Although the renter will lose the option fee and all their rent credit money, that amount will be much less than if the renter had bought the house outright and tried to leave it later.

rent-to-own, from page 7

Here’s a typical example: The house is worth $200,000, and typical rent would be $1,000 a month. Someone who’s renting to own might pay $1,200 a month in rent and then receive a $200 rent credit each month. Add the option fee, in this case $5,000. On a three-year lease, the renter would earn $7,200 in rent credits. Adding the earned rental credits to the option fee, the renter has accumulated $12,200 for a down payment. This is a valuable alternative for buyers who otherwise wouldn’t have the credit score or money saved to acquire their own home. And the sellers earn this money whether or not the house sells once the leasing period expires. If, at the end of the contract the renter can’t or chooses not to buy the house, the seller keeps all the money. As with any business contract, there are mutual risks and disadvantages involved for both parties. What if someone else wants to purchase the house for a higher price than originally negotiated? Who’s responsible for fixing the leaky roof in the middle of the night? Read on to discover the advantages and disadvantages for each side.

• Buyers still have to pay the upfront option fee. It’s usually a percentage of the agreed-upon selling price of the home and is often thousands of dollars. Although this money will go to the down payment should the renter decide to buy the house, it can still be difficult to accumulate that much money before renting. • If the buyer is just one day late on a month’s rent payment, most agreements void the rent credit for that month. Think about the previous example, where the three-year renter received a $200 rent credit each month. If the buyer paid the rent late just three times each year, at the end of the lease period, the buyer would have $1,800 less for the down payment. The buyer in the rent-to-own agreement must pay on time, every time. • If the seller fails to pay the original mortgage on the house, it may be foreclosed and the buyer forced to move. • At the end of the rental period, the buyer still may not be able to buy the home for the same reasons they couldn’t buy at the start of the lease: bad credit, insufficient down payment, not enough income. All those repairs that used to be somebody else’s problem in a rented apartment often become the responsibility of the new buyer, even during the rental period. Whether it means climbing on a ladder to unclog the gutters or having to pay for a new washing machine when the original washer breaks, the renter has to take care of it. In some communities, the (continued — see rent-to-own, p. 9)

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WHERE LANDLORDS GO FOR HELP

rent-to-own, from page 8 municipality will still hold the seller responsible under the local rental property maintenance code and certification program. If you’re the seller in a rent-to-own arrangement, here are some of the ins and outs from your perspective.

Risks and Benefits to Sellers Here are some pros and cons sellers can expect in a rentto-own contract: • If home values are falling, sellers can lock in a higher price at the start of the agreement. • Renters who are looking to own generally treat their living space and community better. They’re planning for their future, instead of living in a place they’ll vacate in a year or so. • If a renter does back out at the end of the agreement, the seller still has the option fee and rent premiums as income. However, the seller is back to square one, which may be difficult for some homeowners who just want to be free of their old house.

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• If a new potential buyer comes along who wants to purchase the house for a higher price, the seller is out of luck. He entered into a contract with the renter, and he has to abide by it. • Many sellers use the rent they earn to pay the existing mortgage on their investment, which eases their financial burden. If the renter can’t make payments, the seller could be forced into foreclosure. Because of the many concerns on each side of the rentto-own transaction, both buyer and seller should obtain the assistance of a real estate attorney (two different attorneys) so that each party is fully aware of its rights and responsibilities [source: University of Tennessee Law School].

November/December 2013 MICHIGAN LANDLORD 9


RENTAL PROPERTY OWNERS ASSOCIATION

POLICY ENFORCEMENT

The Resident Who Ran Out of Checks By Dan Arnold, author of Stupid Mistakes of a Self-Made Millionaire Landlord, available at LandlordBooks.com.

If you thought that the broken-down-car excuse was a good one, you haven’t heard anything yet. The level of creativity desperate residents can achieve is only limited by the gullibility of the landlord (and I was pretty gullible sometimes). When it comes right down to it, you have to be prepared to deal with bad residents. I’ve heard many landlords who respond to that by saying how much time and effort they put into screening their applicants and as a result they don’t rent to bad residents. That is commendable and certainly the correct approach to take, but it won’t guarantee you that a good resident won’t “turn” bad over time. I had rented a three-bedroom apartment to a nice husband and wife with three kids. They seemed like the allAmerican family. Tom the husband, worked as a delivery driver and Carolyn, the wife, worked nights at a furniture store. They basically lived paycheck to paycheck and just wanted a nice home to raise their three kids in. They were great residents for years and then they started to fall behind in the rent. Evidently, one of them had their work hours cut back and as a result the bills started to pile up. Because of their previous good track record, I tried to work with them the best I could. Eventually the rent went from coming in short a few dollars to not coming in at all. Instead of being a few days behind, now they were a month behind. For a while, I actually believed many of the excuse, but then the excuses started to multiply and even get a little outlandish. Soon it was evident that “I mailed you a check last week” was just a blatant lie to buy more time. I don’t know if Thomas Jefferson was a landlord, but he surely understood human nature when he stated a famous quote about it. Jefferson stated, “He who permits himself to tell a lie once, finds it much easier to do it a second and a third time ‘till at length it becomes habitual.” My residents

10

had certainly changed from the honest people they were when they first moved in. The final straw was when Tom assured me that they had the rent money in their bank account, but they couldn’t pay me because they had “run out of checks”. Before I could even open my mouth to comment on how ludicrous that excuse was, Tom blurted out, “And we went down to the bank and spoke with the bank manager about getting our money out, but the bank manager insisted that we can’t access any of our money until more checks arrive and that will take about two weeks”. I didn’t know whether to laugh at how stupid that sounded or yell because I obviously wasn’t going to get my rent. Instead, I just said, “Okay,” and then drove to the courthouse to file the eviction papers. When the eviction was finally complete and they were thrown out of the apartment by the constable, they disappeared so fast they didn’t even bother to take their cat or their young son’s hamster-I had to find homes for both. Can you imagine leaving your children’s pets behind! Lesson learned: Even good people will lie when backed into a corner over providing shelter for their family. Treat everyone the same and just have a standard policy for how and when you’ll file for eviction. As Donald Trump says, “It isn’t personal, it’s just business.” Keep it business-like and follow your policy consistently with every resident. Reprinted from Mr. Landlord, Volume 28 #6


WHERE LANDLORDS GO FOR HELP

CASHFLOW

TEAM UP.

Utilities in Resident’s Name

TAKE YOUR BUSINESS

TO THE NEXT LEVEL.

Unless there is some specific technical reason for not doing so, all utilities should be paid by the resident. Be sure to contact the various utility companies prior to the resident’s moving in to make sure they have been turned on AND in the name of the resident on the lease. It may be wise to contact the utilities again before he or she moves out to make sure that there are no outstanding bills that the resident was responsible for. Some landlords check with utility companies before returning security deposits, especially if the landlord could be held ultimately responsible for unpaid utility bills. Consider having a provision in your lease that allows the landlord to charge to resident’s account (as additional rent) for any unpaid utility bills. By Ken Roth, The Successful Landlord, available at LandlordBooks.com. Reprinted from Mr. Landlord, Volume 28 #6

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Allison Koetsier 616-633-9445 avkoetsier@sbcglobal.net

November/December 2013 MICHIGAN LANDLORD 11


RENTAL PROPERTY OWNERS ASSOCIATION

Check out the discounts being made to RPOA members only:

Member-to-Member Discounts: $$$aving you dollars! Amera Mortgage Free appraisal for 1 to 4 family unit homes with closed loan application for RPOA members only. Jim Riley, 616-292-4491. Bender Maintenance & Home Improvement 10% off hourly rate for RPOA members. Property maintenance, general repairs; prepare property to rent at acquisition; inspection compliance for Section 8, City of Grand Rapids. General Contractor, Certified Lead Renovator, RPOA Member. 616-975-0126. DINA AND SONS LAWN CARE AND HANDYMAN SERVICE LLC Professional landscaping and handyman services. Reasonable rates, dependable. Landscaping includes all yard work. Handyman ser vices include basic plumbing, electrical; drywall, painting, window and door repair. 10% discount on labor. Call Dina, CEO, 616-262-9220, Mitchell, 616-710-9080. Grand Rapids Carpet & Furniture Cleaners RPOA Members receive 25% discount! Call Dave, 616-453-5368. Hungerford, Aldrin, Nichols & Carter, PC Free initial consultation on tax, accounting, and consulting services to RPOA members. Contact Kyle Sischo at 616-949-3200. Indoor Climate Solutions Offering all RPOA members Grand Rapids heating inspection stickers for $40.00 each and 5% discount on repair or replacement of any HVAC equipment. Over 40 years experience servicing and installing furnaces, boilers, air conditioning. 616-891-HEAT (4328)

12

JB Harrison Insurance Agency Independent agents representing several companies (Auto-Owners, AAA, Citizens, Hastings, Hartford, Pioneer State Mutual, Progressive). We do the shopping for you. Group discounts available for RPOA members. Call Mike Murphy at 616-8680050 for details. Jeff Lamborne Agency We represent several companies. We shop them for you. Group discounts available. Call Jeff Lamborne for details. 616-447-0274. Koetsier Realty LLC Up to $500 off listing services to RPOA members. Call Tom, 616-550-4447. Pawlowski & Reens, PLC, Attorneys at Law Discounted fees and free limited phone consultation on any legal issue. 616-4587800. republic Waste removal services Exclusive RPOA discount! $11/month for 96 gal. cart. Call Jeff Nienhuis at 616-3085760. RMS LLC Towing of abandoned and improperly parked cars on your property. Offering to RPOA members at no cost. Free signage for RPOA members if required by State of Michigan laws. Call 616--475-9836 or email impounds@rmsonline.us. RPOA is now a member of Prosource Wholesale Floorcovering! Come to Prosource at 1575 Gezon Parkway, Suite A in Wyoming, and receive 50% off carpet, pad and sheet vinyl and 30% off all hard surface. Show us your membership card! Call Peggy, 616-257-3200. Rylee’s Ace Hardware 10% discount on cash purchases. Some restrictions apply. Offer valid at Grand Rapids & Walker locations.

Sun Rentals Pay cash and receive 15% off any rental, any time. 616-454-7982. USA-mls Advertise your properties on over 40 of the most popular Real Estate sites. RPOA Members $30 per month, unlimited listings. Free custom website with listings displayed, plus many more benefits. USAmls.com. Call 1-800-206-0080. www.firstfinancialresource.biz Bullet proof protection, irrevocable asset protection trusts, 15% discount to RPOA members 3 trust package. John H. Aggeler, Financier, 616-299-0757 or financier1945@gmail.com. $30K to $30M investment property loans, cash for land contracts/receivables. West Michigan Pro Clean WMPC is ready to handle your cleaning needs by offering move-in/move-out, carpet, post-construction, and general commercial cleaning. RPOA members receive a 20% discount on their first cleaning. Call 616-299-1757 or email wmp rocl ean @ yahoo.co m fo r FREE estimate.

Associate members who would like to participate in the discount program should call Kathy Rozenek at 616454-3385. Patronize one of our Associate members participating in the Business to Member Discount Program!


WHERE LANDLORDS GO FOR HELP

November/December 2013 MICHIGAN LANDLORD 13


Landlord Liability

Tenant’s Pit Bull Dog Attacks Another Tenant Victim contends landlord is liable in negligence for not evicting dog owner and not imposing landlord regulations prohibiting pit bulls This case addresses the issue of whether a landlord has a duty to protect third parties from tenants’ dogs based on landowner ability to evict the dog owner and/or landowner regulations prohibiting certain breeds of dogs—such that a failure to fulfill that duty could leave the landlord liable in negligence for a dog bite injury. Citation: Burnett ex rei. Burnett v. Clarke, 2013 WL 1010062 (Mich. Ct. App.2013)


WHERE LANDLORDS GO FOR HELP

The Background/Facts: Renee Burnett (“Burnett”) and her daughter Kalynn lived in a manufactured home community (the “Community”) owned by Hillcrest Acres Associates, L.L.C. (“Hillcrest Acres”). Crystal Clarke (“Clarke”) also lived in the same manufactured home community. In May 2006, Burnett sent Kalynn to Clarke’s home to look for Kalynn’s younger sister. Kalynn knocked on Clarke’s front door, and, when the door opened, Clarke’s pit bull, Bruno, “suddenly lunged at Kalynn, bit her on the right side of her cheek, and ran away.” The cut from the bite required stitches and left a scar on Kalynn’s face. Burnett, as next of friend for Kalynn, later sued Hillcrest Acres. Burnett alleged that Hillcrest Acres was negligent as the landowner and that negligence was the proximate cause of Kalynn’s injuries from the dog bite. Among other things, Burnett argued that Hillcrest Acres should have: removed Bruno from the Community; and/or evicted Clarke for violating Community rules, which prohibited certain breeds of dogs including pit bulls. Burnett also contended that Hillcrest Acres, through its rules and regulations prohibiting pit bulls, voluntarily assumed a duty of care-and was liable in violating that duty. The trial court rejected Burnett’s arguments. It entered an order of judgment in favor of Hillcrest Acres. Burnett appealed. DECISION: Affirmed. The Court of Appeals of Michigan held that Hillcrest Acres, as landlord of the mobile home community, was not liable for injuries sustained by tenant Kalynn, from a bite from tenant Clarke’s pit bull dog. In so holding, the court explained that to succeed on her negligence action against Hillcrest Acres, Burnett had to prove: (1) that Hillcrest Acres owed a duty to Kalynn; (2) that Hillcrest Acres breached that duty; (3) that Hillcrest Acres’ breach of that duty caused Kalynn’s injuries; and (4) that Kalynn suffered damages. The court further explained that in regard to dog bite liability, Hillcrest Acres would only have a duty, and therefore could only be liable, if it had: (1) knowledge of the dog’s vicious nature; and (2) control over the premises. The court found both of those factors absent here. Evidence that Bruno had previously run from a child or was later seen “growling and barking while bouncing against Clarke’s front window” did not establish that Bruno’s behavior was “abnormally dangerous or usually vicious,” found the court. Moreover, the court found that Hillcrest Acres could not have lawfully exercised control over Bruno. The court said this was because Kalynn was bitten on Clarke’s front porch, which was land under the control of Clarke.

Furthermore, the court rejected Burnett’s theory that Hillcrest Acres could have exercised control over Bruno by evicting Clarke. The court said that even if it had accepted that theory, because Bruno’s only other alleged offense-a child chasing incident-occurred two weeks before Kalynn was bitten by Bruno, Hillcrest Acres could not have lawfully exercised control over Bruno by evicting Clarke since a tenant has at least 30 days’ notice before eviction. Burnett had also contended that Hillcrest Acres, thorough its rules and regulations prohibiting pit bulls on its premises, voluntarily assumed a duty of care. Burnett had argued that by not enforcing those regulations on Clarke, Hillcrest Acres had breached that duty and was liable in negligence for Kalynn’s injuries. The court rejected that argument too. The court explained that whether Hillcrest Acres had a duty that should be imposed depended on: (1) the foreseeability of harm; (2) the degree of certainty of injury; (3) the closeness of connection between the conduct and the injury; (4) the moral blame attached to the conduct; (5) the policy of preventing future harm; and (6) the burdens and consequences of imposing a duty and the resulting liability for breaching the duty. Applying those factors, the court found that Hillcrest Acres did not voluntarily assume a duty of care by promulgating the rule that prohibited Pit Bulls at the manufactured home community because: (1) the harm was not foreseeable because Bruno had not previously exhibited vicious behavior; (2) the injury was certain because Kalynn was bitten; (3) there was a loose connection between the injury and Hillcrest Acres’ failure to enforce its rules because, although there was no evidence that Clarke would have removed Bruno, there was evidence that she had previously removed similar dogs; (4) Hillcrest Acre’s failure to enforce its rules did not demonstrate a blatant disregard of safety because Bruno had not previously displayed vicious tendencies; (5) Hillcrest Acres policy did prevent future harm; and (6) the burden on Hillcrest Acres to enforce the rule was slight and they could insure against the risk. The court concluded that “the most that can be said is that [Hillcrest Acres’ rule prohibiting Pit Bulls] created a duty on the part of the [Clarke] to [Hillcrest Acres] because [Hillcrest Acres’] rule prohibited tenants from bringing pit bulls on the land.” See also: Feister v. Bosack, 198 Mich. App. 19, 497 N. W.2d 522 (1993). See also: Braun v. York Properties, Inc., 230 Mich. App. 138, 583 N. W.2d 503 (1998).

Reprinted from Landlord Tenant Law Bulletin, June 2013 issue.

November/December 2013 MICHIGAN LANDLORD 15


RENTAL PROPERTY OWNERS ASSOCIATION

Grand Valley Health Plan ranks

#4

in the Nation! • Consumer Experience • Prevention • Treatment According to the U.S. News & World Report/NCQA America’s Best Health Plans 2008 rankings. “America’s Best Health Plans” is a trademark of U.S. News & World Report.

Grand Valley Health Plan is proud to be the only commercial health plan in Michigan to rank in the top 10 honor roll in the nation. Log onto www.ncqa.org for a complete list of rankings.

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WHERE LANDLORDS GO FOR HELP

Start Earning Your Rebate!

RPOA Snags National Discount with Home Depot RPOA members can start receiving a 2% rebate* on all purchases made through Home Depot! This rebate is on top of any other discount or sale price, including contractor rates. It’s simple to get started. Use the form inserted into this issue of the Michigan Landlord to sign up, and fax it to the RPOA office at 616-454-6163. After we process the form, a person from Home Depot will contact you to obtain additional account information. To ensure that you are credited for all purchases, a Home Depot account number, debit card or credit card number (or all three) will be attached to your rebate account. Every time you use one of these payment methods, you will earn a 2%

rebate*.

Rebate checks are mailed every six months.

If you have any questions, contact a staff member at the RPOA office at 616-454-3385.

*2% rebate is earned on annual purchases of $1,250 or more.

September/October 2013 MICHIGAN LANDLORD 17


Rules for Avoiding Source-of-Income Discrimination

Rule #1

Get to Know State and Local Law Find out whether your community is subject to state or local laws banning discrimination based on source of income. Currently, 12 states and the District of Columbia include protections based on source of income in their fair housing or civil rights laws. They include:

California Connecticut Maine Massachusetts Minnesota New Jersey North Dakota Oklahoma Oregon Utah Vermont Wisconsin

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If your state is on the list, check the details to determine what the law covers—and specifically what it says about Section 8 housing vouchers and other housing subsidies. In Massachusetts, for example, the law bars communities from discriminating against individuals who receive public assistance or rent subsidies, including Section 8 housing vouchers. But in Oregon, the law bans discrimination based on source of income, but it specifically excludes federal housing subsidies under the Section 8 housing program. Even if your state isn’t on the list, it’s important to check the details of local fair housing laws. In many states, county and municipal governments have taken the lead to ban discrimination based on source of income, with particular attention to Section 8 housing vouchers. As many as 40 jurisdictions have adopted such measures, including New York, Chicago, Los Angeles, Philadelphia, Seattle, and many smaller cities, along with county governments in Illinois, Maryland, Oregon, Washington, and other states.


WHERE LANDLORDS GO FOR HELP

COACH’S TIP: In the absence of current laws regarding source of income, ask your attorney to keep you apprised of any pending changes to the law in your state and local area. Each year, state and local lawmakers across the country consider proposals to add fair housing protections based on source of income, including housing subsidies. For example, discrimination against voucher holders was already outlawed in Chicago, but in May 2013, lawmakers in Cook County, 111., extended the ban to the rest of the county by amending its source-of-income protections to cover Section 8 voucher holders.

Rule #2 Don’t Reject Applicants Based on Source of Income Failure to abide by state, county, or local laws banning discrimination based on source of income can lead to fair housing trouble. Last year saw a 38 percent spike in the number of complaints based on lawful source of income, according to the National Fair Housing Alliance’s (NFHA’s) 2013 report, which noted that fair housing organizations reported 569 complaints in 20l2-up from 353 in 2011. But that’s only the tip of the iceberg, according to the NFHA, which pointed to recent fair housing tests that revealed significant levels of discrimination in jurisdictions where only a few formal complaints were filed. Meanwhile, fair housing advocates continue to pursue active investigations into compliance with laws banning discrimination based on source of income. Example: In March 20l3, the Equal Rights Center (ERC) released the latest in a series of reports in its ongoing investigation into discrimination against Section 8 voucher holders in the District of Columbia. The latest investigation found that 28 percent of voucher holders encounter housing discrimination, down from 45 percent in 2010 and 65 percent in 2005. In the most recent investigation, the ERC conducted 90 phone tests of rental housing providers, ranging from large and small apartment complexes to basement apartments in row houses. In 28 percent of the tests, a caller inquiring about renting an apartment with a voucher was subjected to some form of discriminatory treatment-including outright refusal to accept the voucher, limiting the use of the voucher, imposing different terms or conditions for a voucher holder, or imposing limitations that would effectively bar a voucher holder from obtaining the housing.

“The fact that the rate of source-of-income discrimination in the District has decreased by more than 50 percent in less than 10 years confirms that continued education, outreach, and monitoring is improving many families’ ability to use their vouchers,” Executive Director Don Kahl said in a statement. “Despite this progress, more than one in four voucher holders continue to face discrimination. These kinds of barriers to equal housing opportunity simply cannot continue to be tolerated in the nations’ capital.” To comply with laws banning discrimination based on source of income, communities should make sure that they don’t turn away applicants simply because they’re unemployed or receive financial assistance, such as rental assistance or disability benefits. Otherwise, you could trigger a fair housing complaint-win or lose, it still can be costly to resolve. Example: In May 20l3, a Connecticut landlord and his former property manager agreed to pay $150,000 to settle a fair housing case alleging that they unlawfully refused to accept lawful sources of income that also served to discriminate against individuals with disabilities. The lawsuit was filed by the Connecticut Fair Housing Center, based on the results of fair housing testing dating back to 2009. The complaint alleged that the owner and manager repeatedly expressed an unwillingness to rent to individuals because they either attempted to use state assistance programs or disability benefits to pay their rent or security deposits, or they could not demonstrate they were employed. Without admitting liability, the owner and property manager agreed to a settlement, which requires them to pay $150,000, adopt a fair housing policy, receive fair housing training, and cooperate with the monitoring of certain rental practices for three years. “Source-of-income discrimination such as the refusal to accept rental assistance programs or other government aid causes real harm to individuals and families, particularly those with disabilities, seeking housing,” the Center’s Legal Director Greg Kirschner said in a statement. “These types of settlements underscore the severity of these violations and further the Center’s mission of ensuring all people have access to the housing of their choice, free from discrimination.” (continued — see fair housing, p. 23)

November/December 2013 MICHIGAN LANDLORD 21


procedures & prices RPOA & REI Decision Report request

Please follow the procedures below when requesting decision reports from the RPOA: ❑❑ When possible, please use the RPOA Decision Report Request Form and fax it to the RPOA office at 616-454-6163 OR send us an e-mail with the same information to: contactrpoa@rpoaonline.org. (DO NOT fax applications to us.) ❑❑ You must have the following minimum information to run a report: • First and last name of prospective tenant(s). • Current address of the prospective tenant, including street with number, city, state and zip code. • Social Security Number. • Date of Birth • Your RPOA member #, name of membership, and an indication on how you would like the completed reports handled, i.e. faxed back to you (if so, provide the fax number), or you will call the office for the report, or you will pick up the report in person. ❑❑ WAIT AT LEAST THREE (3) HOURS before contacting the RPOA office for your reports. Though we can sometimes get reports done quicker, there are many things out of our control that can interfere with this process, including but not limited to credit reporting agency computer problems. • Contact us for your decision report results promptly. For reasons of confidentiality we shred all reports after 3 days.

Other guidelines for decision reports: • You cannot run a decision report on yourself. • You can only run a decision report on another family member if you are doing a business transaction with that person that is related to real estate or rental property. • You cannot run a decision report for another business person, real estate agent or landlord. Your credit reporting privileges through RPOA extend only to your personal business. • You can only run a decision report for a legitimate business transaction where credit is required. These transactions include owner financed real estate, leasing, collections and land contracts. • You must follow all the rules and regulations of the Federal Fair Credit Reporting Act. A copy of this Act is available at the RPOA. • You must give a person denied housing or financing because of information contained in a credit report a notice to that effect. Examples of notices that you can use and what needs to be included in the notice can be found in the RPOA office; or log on to the RPOA website (www.rpoaonline.org) and go to Tenant Screening.

report Prices (as of June 1, 2012) Single: $14.00 Double: $20.00 Criminal Report: $6.00 each

22


WHERE LANDLORDS GO FOR HELP

fair housing — from page 21

Rule #4

Follow Standard Procedures Regardless of Source of Income Follow standard policies and procedures when dealing with prospects and applicants to ensure that every prospect visiting your leasing office is treated the same way, regardless of her source of income. For example, you should offer every prospect-regardless of her source of income-a rental application and invite her to fill it out. Be consistent in applying your screening criteria-including credit history, rental history, criminal background, and the like-to all applicants, regardless of the source of funds used to pay rent.

Rule #3

Watch Your Language Make sure that your compliance efforts extend to what you say in your advertising-and how you respond to telephone or online inquiries-about your willingness to accept Section 8 housing vouchers or other forms of public assistance. The wrong message may trigger a fair housing complaintor draw the attention of fair housing enforcement officials or organizations, who are monitoring online advertising for compliance with state and local laws banning discrimination based on source of income. If these laws apply to your community, then it’s unlawful to make statements or disseminate advertising that indicates a preference or limitation based on a prospect’s source of income. For example, your community may not publish advertisements that say, “No Section 8,” or tell prospects over the phone that you don’t accept Section 8 housing vouchers. If you do, you may trigger a fair housing complaint because you’re effectively screening out all Section 8 prospects before they even apply. In addition, it’s unlawful to provide inaccurate or untrue information about the availability of units for discriminatory reasons. Such prohibited conduct includes indicating, through words or conduct, that an available unit has been rented, or limiting information about suitably priced available units, because of the prospect’s source of income.

COACH’S TIP: When meeting with prospects, make sure to tell them about all vacancies that meet their needs, regardless of their source of income. Telling applicants receiving housing assistance about vacancies in only particular sections of the community amounts to unlawful steering, a form of discrimination based on source of income.

It’s unlawful to refuse to allow a prospect to apply to live in the community-or to impose procedural hurdles that make it more difficult for prospects with housing assistance to get through the application process. Fair housing organizations are taking notice and acting on complaints of discriminatory treatment during the application process. Example: In April 2013, the Fair Housing Justice Center (FHJC) filed a lawsuit on behalf of a woman living with AIDS, who claimed that she had been denied a unit in a 5,000-unit community in New York City because she intended to pay her rent using a housing subsidy for people with HIV/AIDS issued by a city agency (HASA). According to the FHJC, the owner and its affiliates are among the nation’s largest landlords, with rental communities in New York, California, New Jersey, Oregon, and Washington. Based on the complaint, the FHJC conducted an investigation, which allegedly revealed systemic discrimination based on source of income and disability at all the owner’s rental buildings in New York City. The lawsuit accused the community and its rental management company of treating applicants with rental assistance of any kind, including persons with a HASA housing subsidy, differently and less favorably than applicants with income from employment. For example, the complaint alleged that applicants who were employed were allowed to go directly to a convenient on-site leasing office, meet with a leasing agent, obtain floor plans, and view available apartments before having any income verified or completing a rental application. In contrast, the complaint alleged that applicants with any (continued — see fair housing, p. 26)

November/December 2013 MICHIGAN LANDLORD 23


Upcoming Seminars and Events HELPING REAL ESTATE INVESTORS BECOME MORE SUCCESSFUL Nov. 5, 2013 • 10:00 a.m. to 12:00 p.m.

Nov. 18, 2013 • 6:00 p.m.

Financing 101: The Basics - CE, PHP

SAVE MONEY AND AVOID LAWSUITS UNDERSTANDING FEDERAL, STATE AND LOCAL REGULATIONS

Con-Ed Approved Class for Realtors. Earn 2 hours! Presented by Brian Zeemering, Licensed Real Estate Salesperson, Mortgage Broker & Investor

1 Hour CE and Construction Credit

There is a lot of lingo in the financing business. Brian Zeemering helps you understand what it means and how to secure and manage financing.

Learn how you can avoid fines, fees, penalties and lawsuits by attending this overview of Federal, State and Local lead laws.

Nov. 7, 2013 • 6:00 p.m. to 8:00 p.m.

Dec. 5, 2013 • 6:00 p.m. to 8:00 p.m.

It’s All About the Numbers: APOD 101 - ce

Appraising: The Inside Scoop - CE, PHP

Con-Ed approved Class for Realtors. Earn 2 hours! Presented by Russ VandenToorn, Realtor, Property Manager & Investor

Con-Ed Approved Class for Realtors. Earn 2 hours! Presented by Kim Post, Licensed Appraiser & Investor

Do you know all the different kinds of returns from investment in real estate and how they are calculated? This course will help both realtors and investors to understand, analyze, and complete the key elements of the Annual Property Operating Data form.

Learn how the professionals like Appraiser and real estate investor, Kim Post, determine value. Knowing how a property is valued is important for buying and selling. Learning the process will make you a smarter buyer and seller.

Dec. 10, 2013 • 10:00 a.m. to 12:00 p.m. Nov. 14, 2013 • 6:00 p.m. to 8:00 p.m.

Understanding Leases & Contract Law Con-Ed Approved Class for Realtors. Earn 2 Hours! Presented by Clay Powell, Director of RPOA Thinking of writing your own lease? Confused about the terminology used on a lease? Clay Powell will provide a foundation of the requirements for leases in the State of Michigan. Participants learn about what can and can’t be in a lease, how tenants can walk away from a lease, and more.

Nov. 14, 2013 • 8:00 a.m. to 5:00 p.m. 8-Hour Class

Renovation, Repair & Painting 8 Hour CE; 8 Hour Construction Credit Limit: 12. Call RPOA for pricing.

Buying & Selling Real Estate for Profit Con-Ed Approved Class for Realtors. Earn 2 hours! Presented by Tom Koetsier, Real Estate Investor & Broker It is important to understand the rules and laws of real estate investment, whether you are a current owner or considering entering the market! There are many pitfalls and problems that can arise in real estate investment: learn how to avoid complications and difficulties while saving money in the process. Join Tom Koetsier, RPOA Board President and experienced real estate investor and broker, as he eliminates the mystery from purchasing real estate. Through his class you will learn how to KEEP IT LEGAL AND PROFITABLE as you negotiate inspections, title work, transfer taxes, and other important real estate transactions. Don’t lose time or money by not being properly educated about investing!

Richard TenHoor, Certified Lead Safe Work Practices Trainer, Landlord and RPOA Member, will teach lead-safe work practices in a comprehensive session. Not knowing how to work in a leadsafe manner can expose your rental business to liability. The EPA now requires all landlords to use lead-safe work practices and be certified under the new RRP rules.

All events are held at the RPOA office unless otherwise noted. Cost: $25 Gold members, $35 Silver members and non-members unless otherwise noted.

24

CE = CERTIFIED COURSE FOR REAL ESTATE CONTINUING EDUCATION PHP = PROFESSIONAL HOUSING PROVIDER CREDIT


! s u n i o J

Real Estate Investors (REI) Friday Morning Breakfast Roundtable Held every Friday, 8–9 a.m. Cheshire Grill / 2162 Plainfield NE, Grand Rapids, MI

REGISTER BY CALLING 800.701.7762 OR EMAIL CONTACTRPOA@RPOAONLINE.ORG Dec. 12, 2013 • 6:00 p.m. to 8:00 p.m.

Jan. 9, 2014 • 6:00 p.m. to 9:00 p.m.

Landlord-Tenant Law: Avoiding Fines & Penalties

Foundations of Buying, selling, and Leasing Rental Property - CE

Con-Ed Approved Class for Realtors. Earn 2 Hours!

Con-Ed Approved Class for Realtors. Earn 2 hours credit! Presented by Clay Powell, Licensed Real Estate Salesperson & RPOA Director

There’s more to managing rental property than meets the eye. Bill Reens, Attorney at Law, will present Michigan landlord-tenant laws in an easy-to-understand session.

Dec. 12, 2013 • 8:00 a.m. to 5:00 p.m. 8-Hour Class

Renovation, Repair & Painting 8 Hour CE; 8 Hour Construction Credit Limit: 6. Call RPOA for pricing. Richard TenHoor, Certified Lead Safe Work Practices Trainer, Landlord and RPOA Member, will teach lead-safe work practices in a comprehensive session. Not knowing how to work in a leadsafe manner can expose your rental business to liability. The EPA now requires all landlords to use lead-safe work practices and be certified under the new RRP rules.

Dec 17, 2013 • 6:00 p.m.

SAVE MONEY AND AVOID LAWSUITS UNDERSTANDING FEDERAL, STATE AND LOCAL REGULATIONS 1 Hour CE and Construction Credit Learn how you can avoid fines, fees, penalties and lawsuits by attending this overview of Federal, State and Local lead laws.

The class will provide a complete overview of the entire rental business—from buying a property through management and selling. Some of the points to be covered in the course include: • Proper due diligence before buying or turning your existing home into a rental property. • Federal, state and local regulations regarding rental property ownership and management. • Methods for effective management, including tenant screening, dealing with problem tenants, evictions and more. • Setting rental rates and effectively advertising rental property. • Proper forms to use for leasing. • What to do before selling a rental property.

Feb. 1, 2014 • 9:00 a.m. to 12:00 p.m. Feb. 4, 2014 • 6:00 p.m. to 9:00 p.m.

appealing property tax - CE, PHP Con-Ed Approved Class for Realtors. Earn 3 hours! Presented by Tom Koetsier, Real Estate Investor, Landlord and Broker Tom Koetsier, real estate broker and investor, will share his extensive knowledge on the process of appealing tax assessments. His course will provide hands-on examples of how to complete the process successfully. Tom has successfully appealed dozens of property tax assessments. $49 Members / $69 Non-Members

July/August 2013 MICHIGAN LANDLORD 25


RENTAL PROPERTY OWNERS ASSOCIATION

fair housing — from page 23 type of rental assistance, including persons with a HASA rental subsidy, were required to go to a separate off-site leasing office, speak with employees behind a glass window, complete a rental application, submit to a credit and criminal background check, and provide other documentation just to be placed on a waiting list and before any information would be provided about apartments for rent or available apartments would be shown. The lawsuit alleged that this different treatment constitutes intentional source-of-income discrimination under the New York City Human Rights Law. The complaint is the latest of a series of lawsuits filed by the FHJC on behalf of prospects attempting to rent a unit with a HASA housing subsidy in New York City. In March 2013, a large realty company agreed to pay $212,500 to settle a lawsuit involving the city’s ban on discrimination based on source of income. And in December 2012, a court ordered two New York City real estate firms to pay $25,000 in damages for sourceof-income discrimination against a HASA client and others using government subsidies. According to the court, one of the brokers refused to assist HASA clients altogether. Although the other worked with HASA clients, it refused to show them properties owned by landlords who didn’t accept HASA subsidies. The court rejected the brokers’ claim of a legitimate business justification based on delays in the approval process and payment of deposits. Although there could be circumstances when a landlord or realtor might prefer a so-called market-rate client over a RASA client or a person receiving a governmental rental subsidy, that wasn’t the case here. The court noted that the broker who worked with the prospect didn’t tell him that he was ineligible for certain apartments because they were available immediately and that RASA applications would take too long to process. Rather, it indicated that certain apartments didn’t accept programs under any circumstances because they were only for working people [Short v. Manhattan Apartments, December 2012].

Rule #5

Apply Standard Screening Policies Source-of-income laws ban discrimination against applicants because of where they get their income not the amount of their income. You may ask about the source of the

26

applicant’s income, as long as you don’t discriminate based on that information. Communities have the right to rent only to applicants they believe to be responsible and who will pay the rent. You may require applicants to satisfy your screening criteria-such as credit checks, criminal background checks, and rental history-as long as you apply the same standards to all your applicants, regardless of their source of income. For example, you don’t have to accept an applicant who receives financial assistance if you have other nondiscriminatory reasons for rejecting him, such as a criminal record, as long as you apply that policy consistently to all applicants. Other legitimate, nondiscriminatory reasons for rejecting an applicant might be bad credit history or prior evictions for nonpayment of rent or damage to the apartment. Regardless of the applicant’s source of income, you don’t have to accept individuals who can’t demonstrate their ability to pay their rent. Communities may require all applicants to satisfy minimum income requirements, such as two or three times the rent, and may verify that the applicant can satisfy that standard. Doing so doesn’t violate state or local laws banning discrimination based on source of income-as long as you apply the same income criteria (taking into account their financial assistance) to all applicants. For example, if your community requires applicants to earn at least three times the rent to live there, you may impose the same requirement on applicants who get Section 8 vouchers or other financial assistance. But you must take into account the amount of their financial assistance to determine whether they meet this requirement, for example, by requiring that they make three times the amount of their portion of rent. Furthermore, communities may refuse to rent to applicants who can’t afford to rent the unit, even with housing subsidies. The Section 8 housing voucher limits the amount of housing assistance based on the amount generally needed to rent a moderately priced unit in the local housing market. If the rent is greater than that amount, then the voucher holder must pay the difference-but by law, a family moving into a new unit may not pay more than 40 percent of its adjusted monthly income for rent.


WHERE LANDLORDS GO FOR HELP

fair housing — from page 26

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Rule #6

BEST

Apply the Same Terms and Conditions, Regardless of Source of Income To comply with laws protecting source of income, communities must treat all applicants and residents equally in the terms, conditions, or privileges of the tenancy, regardless of their source of income. In jurisdictions where the laws include protections for housing subsidies, it would be unlawful to require Section 8 voucher holders to pay a larger security deposit or higher rent than required of other residents. It would also be unlawful to treat residents differently or enforce community rules and policies more strictly against them based on their source of income. You could face a discrimination claim, for example, if maintenance requests by individuals using Section 8 housing vouchers are ignored or put at the bottom of the list. The same would be true if you singled out residents receiving housing assistance for rules violations, while ignoring similar infractions by people who don’t receive such assistance. To avoid a potential violation, provide fair housing training to all employees, stressing the need to treat all your residents in the same professional manner-regardless of their source of income or any other protected characteristic.

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Editor’s Note: Grand Rapids, Wyoming and Kentwood all have ordinances protecting lawful sources of income, including Section 8 rental vouchers.

Where landlords go for help

Rental Property owners association

November/December 2013 MICHIGAN LANDLORD 27


RENTAL PROPERTY OWNERS ASSOCIATION

Good to Know! Did you know that if you have past due rent with a tenant or money the tenant owes you for repairs, you can collect payment through the RPOA using the tenant’s credit/debit card? A parent, friend or employer might be willing to pony up a credit card to take care of your tenant’s bill. Simply call the RPOA office and get a credit card processing form, complete the form with the tenant’s signature, etc. and fax it back to the office or deliver it in person. We’ll process the payment and send you a check minus a 10% processing fee. If you’ve been in the business any time at all, you’ll know how collecting now and quickly is much better than hoping for something in the future.

Call the office to find out more at 616-454-3385.

28


WHERE LANDLORDS GO FOR HELP

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November/December 2013 MICHIGAN LANDLORD 29


RENTAL PROPERTY OWNERS ASSOCIATION

Landlord’s Quarters— A Place for Landlords

Landlords should know the risks of liability associated with tenant smoking and understand how they can limit that liability As one of the cases in this bulletin highlighted, landlords may face the complicated issue of tenant grievances associated with second hand smoke from other tenants. Smoking related conflicts that continue unresolved may expose landlords to legal liability. The “Risks” Associated with Tenants’ Smoking According to a 2010 notice from the United States Depar tment of Housing and Urban Development, secondhand smoke, also referred to as environmental tobacco smoke, can migrate between units in multifamily housing, causing or worsening certain health effects in neighboring tenants, including respiratory illness, asthma, heart disease, and cancer. According to the Centers for Disease Control, secondhand smoke causes almost 50,000 deaths in adult nonsmokers in the United States each year, including approximately 3,400 from lung cancer and another 22,000 to 69,000 from heart disease. According to the United States Environmental Protection Agency, secondhand smoke exposure causes disease and premature death in children and adults who do not smoke.

of the Department of Homeland Security, there were an estimated 18,700 smoking-material fires in homes in 2006. Those fires caused 700 civilian deaths, and 1,320 civilian injuries, and $496 million in direct property damage. In multifamily buildings, smoking is the leading cause of fire deaths. For this reason, some insurance companies may provide a discount when there is a smoke-free policy at the residential rental property. Also, smoking increases maintenance costs of rental units, particularly when preparing a unit for a change in tenancy. Possible Related Landlord Liability Legal claims that may be brought against a landlord by a tenant claiming substantial harm from a neighboring tenant’s drifting second hand smoke include: • nuisance; • negligence; • harassment; • constructive eviction; • violation of the implied covenant of quiet enjoyment; • violation of the implied warranty of habitability.

Smoking can also be a source of fires and fire-related deaths and injuries. Based on data from the U.S. Fire Administration (continued — see LANDLORD QUARTERS, p. 32) 30


WHERE LANDLORDS GO FOR HELP

November/December 2013 MICHIGAN LANDLORD 31


RENTAL PROPERTY OWNERS ASSOCIATION

landlord’s quarters — from page 30

Prohibit Smoking. In lease agreements, landlords may include covenants, conditions, or terms that prohibit residential tenants from smoking in units, as well as in all common areas, including outdoors. Note: State law may already prohibit smoking in indoor common areas if the facility has employees, such as property managers or others, who work on site.

Note: Some cities, including several in California, specifically prohibit smoking in multiunit housing and/or specifically declare secondhand smoke to be a nuisance. Of course, whether any such claims brought by a tenant against a landlord would be successful depend on various factors, including: whether the tenant actually suffered significant harm (e.g., frequent respiratory complaints; missed work due to illness caused by the smoke; absence from the rental unit because of neighbor’s smoke; or other inability to open windows or use a heater in an attempt to prevent smoke from entering the unit). Note: Tenants who have disabilities with conditions made worse by secondhand smoke may be eligible for special legal protections. If such a suit brought be a tenant is successful, possible awarded damages may include: • money damages—such as for medical bills, moving costs, or lost pay; • an injunction might forcing the landlord to designate certain units smoke-free or provide the complaining tenant with a different unit, or take remedial action to inhibit the drifting of smoke—such as installation of exhaust fans or sealing of units.

Potential Solutions for Smoke-Related Complaints Tenants do not have a “right to smoke” in their residential rental units. Smokers do not have a constitutional right to smoke, nor are they a protected class under fair housing laws. Moreover, an addiction to tobacco, nicotine, or smoking is not considered to be a disability under the Fair Housing Act or the Americans with Disabilities Act. Accordingly, as a landlord, if you desire, you have various options for limiting your potential liability associated with tenant smoking: 32

If, as a landlord, you do not currently have a “smoke-free” policy for your residential building, such a policy can be phased in gradually with new leases containing clauses that prohibit smoking. Note: If an existing lease agreement does not prohibit smoking, then you cannot change its terms until the lease expires without tenant consent. In any case, if changing the building rules on smoking, be sure to follow landlord-tenant law by giving notice, having existing tenants sign agreements with the rule change, and applying the rule equally. Importantly, lease language that prohibits smoking should: make clear the purpose of the policy; define proscribed activities (e.g., define “smoking” to not solely mean smoking of “tobacco products”; particularly in states where the use of marijuana is legal, you may wish to also proscribe the smoking of marijuana); spell out landlord and tenant responsibilities; and limit landlord liability for violations of the policy when the landlord takes all reasonable steps to enforce the policy. The lease should not create an express or implied warranty that a property’s smoking policy will increase safety, enhance habitability, or improve air quality. The lease should clearly define what constitutes a tenant breach of the smoking policy and the consequences of a breach. Separate Units. If you own or operate a multibuilding complex, you may consider separating the units of smokers and nonsmokers and designating some buildings as “smoke-free.” Source: “Legal Options for Tenants Suffering from Drifting Tobacco Smoke”; http://changelabsolutions.org Source: National Multi Housing Council, Property Management Update (February 1, 2008), “No Smoking Policies in Apartments.” Source: U.S. Department ofHousing and Urban Development, Office of Public and Indian Housing Office of Healthy Homes and Lead Hazard Control, SPECIAL ATTENTION OF: NOTICE: PIH-2009-2l (HA) (July 17, 2009), “Subject: NonSmoking Policies in Public Housing” Source: www.cdc.gov/tobacco/data_statistics/sgr/index.htm. Source: www.epa.gov/smokefree/healtheffects.html. Source: www.usfa.dhs.gov/downloads/pdf/publications/ Residential_Structure_and_Building_Fires. Reprinted from Landlord Tenant Law Bulletin, August 2013 issue.


WHERE LANDLORDS GO FOR HELP

(616) 532-3626 or (888) 821-8846 Gerritsappliances.com

Advertise in Michigan Landlord! Contact RPOA Ad Salesperson, Tom Koetsier at 616-550-4447 to reserve your ad space today!

November/December 2013 MICHIGAN LANDLORD 33


Why Single Family Rentals are Here to Stay By Chris Clothier

Today, some 52 percent of all rental units in theU.S.are There’s only one reason why the housing crash wasn’t single family homes, housing 27 percent of all renters. any worse than it was on the nation’s homeowners, mortgage lenders and Most, 3.6 million, local communities—and were originally built it wasn’t the federal for owner occupancy 26 percent of single family renters g ove r n m e n t . P r i va te but passed into the investors have accounted ranks of rentals when have no plans to move at all. For them, for 15 to 25 percent of their owners lost them home sales since 2008— through foreclosure. a single family rental is the ideal most of them foreclosures destination; the amenities of single home With 1.2 million more that are poisonous to foreclosures in the local home values. In living without the risk, cost or obligations. processing pipeline market af ter market, and well-funded hedge investors stepped in to funds and REITs now stop real estate markets spending billions to buy and manage single family rentals, that were in a death spiral and created a price bottom many wonder whether there will be a market for so many that made recovery possible. rented houses, which have experienced extraordinary growth. From the peak of the housing boom in 2005 to 2010, Most investors focused on turning these properties into single family rentals grew at a rate of 21 percent versus just single family rentals, often to house foreclosure victims. a 4 percent increase in total housing units. 34


WHERE LANDLORDS GO FOR HELP

single family rentals — from page 34 Is the single family rental boom just another real estate bubble? Or are we witnessing the expansion of a new housing option, one that has existed for centuries that’s perfect for a generation burned by the housing bust and wanting the space, privacy, security and sense of community for their children that they grew up with? A good place to find the answer is to listen to the expectations and dreams of families already living in single family rentals. We contracted with ORC International, Opinion Research Corporation, one of the most respected Caravan survey companies in the world, to look at both apartment dwellers and single family renters to learn more about them. What transpired was eventually published as the National Survey of Renters. Some of the findings were expected. Single-family renters tend to place a higher value on safety, cleanliness and friendliness of the area and schools than on access to parks, recreation and community centers. They also tend to be more affluent than multi-family renters and are more apt to have children. In addition, the data showed that single family home renters tend to be a little older. There were also some surprises: Some 52 percent of all renters, and 60 percent of single family renters, plan on becoming homeowners in the next five years. Clearly, single family rentals are serving as incubators and stepping stones to homeownership for potential buyers who need time to put their finances together and build their credit. However, 26 percent of single family renters have no plans to move at all. For them, a single family rental is the ideal destination; the amenities of single home living without the risk, cost or obligations.

Finally, 84 percent of single family renters gave their property management company or landlord good to exceptional ratings, significantly higher than apartment dwellers. Only five (5) percent rated their property management as poor. There was one final surprise. We asked those renters who did not plan to buy a home in the next five years if access to financing was a reason, and only 29 percent said it was due to difficulties obtaining a loan. More mentioned that they just didn’t want to become owners or that they enjoyed renting. The housing economy is just beginning to recover from a multi-year nightmare that would have been much worse if the single family rentals that are filled with tenants today were still on the market as foreclosures, infecting home values for blocks. The investors who took a gamble, bought them, spent an average of $11,000 on rehabbing them, and now provide housing for others, have reinvented a traditional housing option and adapted it to the needs of a young generation seeking an alternative to apartment living and owner-occupancy. If it works, as our research suggests it will, the closing chapter on the foreclosure crisis will be a happy one. Chris Clothier is an active real estate investor and entrepreneur with executive positions in Memphis Invest, GP, Dallas Invest, GP and Premier Property Management Group.

Reprinted from AOA News and Buyers Guide, August 2013 issue.

November/December 2013 MICHIGAN LANDLORD 35


RENTAL PROPERTY OWNERS ASSOCIATION

RPOA Millionaire Mastermind looking for new participants The RPOA is still offering a very effective networking opportunity for experienced and well-healed investors and rental property owners. The Millionaire Mastermind program enables successful real estate investors to network with like-minded investors. New members are being solicited to participate in the group. The group enables members to network about things that only advanced investors would typically experience and provide an opportunity for these members to investigate potential real estate deals that might not be feasible as individual investors. In addition, a side benefit of the group may be the development of long-lasting friendships. The group meets on a monthly basis. Any RPOA-REI member interested in participating may make an application to be included in the group. There are three basic criteria for participation:

1. Minimum of five (5) years of experience in real estate investment or rental property ownership. And meet one of the following criteria: 2. Minimum of 25 real estate transactions during real estate investment career. 3. Minimum of $2 million in total real estate transactions during real estate investment career.

Applicants must also write a brief statement as to why they wish to participate in the group. Applications are available from the RPOA office. Contact the RPOA office at 616-454-3385.

36


WHERE LANDLORDS GO FOR HELP

Ad-o-Grams Appliance sale Refrigerators, ranges, washers & dryers. Nice selection, all guaranteed, and delivery service. Modern Appliance, 809 College NE, 616-4567039.

Carpet cleaning RPOA members receive 25% discount. Premium carpet care at affordable prices. Call RPOA member Dave Bigelow at 616-822-4710 or Grand Rapids Carpet and Furniture Cleaners at 616-453-5368.

eviction clean-up and dumpster rentals Never have stolen tags again! Clean-ups starting at $35. Or rent one of our 10-, 15-, or 20-yard dumpsters for your remodel or clean-ups. Starting at $175 including dump fees! Call Executive containers at 616-862-5246.

M&M PLUMBING & DRAIN CLEANING Free estimates, toilets, faucets, garbage disposals, drain and water line repairs, replace, etc. Drain cleaning with guarantee. All work done by owner/ licensed plumber. Landlord discounts, licensed and insured. Call 616-560-0799.

SOS Home rehab llc Repair/remodeling for management companies/ homeowners. Inspections to evictions to movein ready apartments. Certified in HVAC, lead and mold. Call Shane Sarver, 616-446-4899; email: ssarver@soshomerehab.com. Licensed, insured, efficient.

November/December 2013 MICHIGAN LANDLORD 37


RENTAL PROPERTY OWNERS ASSOCIATION

BOARD OF DIRECTORS President: Ann Siebelink-Finkler (616) 437-2164 E-mail: annfinkler@gmail.com Vice-President: Bert Heyboer (616) 719-0819 E-mail: bertheyboer@gmail.com Secretary: Tom Koetsier (616) 550-4447 E-mail: tkoetsier@grar.com

1459 Michigan St. NE / Grand Rapids, MI 49503 Phone:

(616) 454-3385 / Fax: (616) 454-6163

E-mail:

contactrpoa@rpoaonline.org

Web Sites:

http://www.rpoaonline.org

www.MIrentalguide.com

Office Hours:

Mon 8:30 AM-5:30 PM

Tue–Thu 9:00 AM-5:30 PM

Fri 9:00 AM-5:00 PM

The Rental Property Owners Association/Real Estate Investors (REI) is a nonprofit business association whose mission is to support and facilitate its members’ success in real estate investment and management.

Advertisers: The deadline for submission of and payment for ads is noon on the 15th day of the month for the following month’s newsletter. Contact RPOA Ad Salesperson, Tom Koetsier, at 616-550-4447 to reserve your Ad space today!

Treasurer: Mark Andresky (616) 855-1979 E-mail: mark@performanceba.com

Other Board Members: Steve DeKoster (616) 776-0572

E-mail: sdeko@aol.com

Mark DeVries (616) 291-2923

E-mail: mark@northernmtg.com

Phil Mol (616) 458-8200

E-mail: philmol@grar.com

David Phillips (616) 745-6683

E-mail: davidrphillips@charter.net

Kim Post (616) 891-0500

E-mail: kim@postandassociates.net

Mark Troy (616) 452-4200

Email: mtroy@compass101.com

Russ VandenToorn (616) 965-2300

E-mail: russ@rentupm.com

Brian Zeemering (616) 608-0940

Email: bzeemering@gmail.com

RPOA Staff: (616) 454-3385 Clay Powell, Director Ava Grover E-mail: avag@rpoaonline.org Kathy Rozenek E-mail: kathyr1@rpoaonline.org Heather Vandenbos E-mail: heatherv@rpoaonline.org

RPOA Director & Newsletter Editor: Clay Powell (616) 454-3385

E-mail: clayp@rpoaonline.org

Ad Sales: Tom Koetsier (616) 550-4447

E-mail: tkoetsier@grar.com

Newsletter typesetter: Michelle VanGeest (616) 949-7813

RPOA Attorney: 38

William Reens (616) 458-7800

E-mail: m.vangeest@att.net


prsrt std U.S. Postage PAID

Grand Rapids, MI 49503

Permit No. 553

THE PUBLICATION OF THE RENTAL PROPERTY OWNERS ASSOCIATION 1459 MICHIGAN STREET NE, GRAND RAPIDS, MI 49503 PHONE: 616.454.3385 FAX: 616.454.6163 CHANGE SERVICE REQUESTED

Your local agent insures your

Rental Property and Apartment Buildings

Jeff Lamborne 4976 Plainfield NE Grand Rapids

616-447-0274

jlambor@fbinsmi.com FarmBureauInsurance.com

Michigan Landlord Nov- Dec 2013