How to Evict a Tenant

How to Evict a Tenant

How to Evict a Tenant

No matter how well you choose your tenants, sometimes bad eggs will turn up eventually among them. If you need to evict a tenant, keep in mind that there are rules and regulations one must follow to do in order to get rid of them for good. Here’s what you need to know.

  1. A well-defined lease is your best bet in evicting tenants more easily. Make sure that your lease clearly outlines when the rent should be paid as well as late fees. Your lease should also include acceptable and unacceptable behavior in the tenant’s home.
  2. Know your local laws. Make sure that you have valid reasons that are recognized by local laws for evicting tenants. These can include failure to pay rent, breach of a lease clause, or repeated violations.
  3. If you’re dealing with violations or breach of a lease clause, you can send an eviction letter immediately. If you’re dealing with a failure to rent case, draft a professional letter requesting the payment within the due date indicated. Inform the tenant that if you have not received the rent by then, the eviction process will begin.
  4. When informing your tenant of his or her eviction, make sure that you follow state and local eviction procedures.
  5. Should the initial letter not be effective enough, file a process of eviction with your local country courthouse or housing department. This will give more weight to your claim.
  6. You can file a lawsuit to evict the tenant if he or she refuses to leave or refuses to correct violations and breach of lease clause after receiving the termination notice.
  7. The court will set a court date where both tenant and landlord will receive notification for. If neither appear in the court date, the case will be dismissed. Should only the landlord attend, the judgment will be handed out. You have to follow the procedures in removing the tenant.
  8. The sheriff will then post a notice to the tenant indicating when the tenant should move out.
  9. Do not threaten, harm, manhandle or even touch the tenant. You may have to go through the whole process again if you do.
Characteristics of Rental Properties

Characteristics of Rental Properties Following the Financial Crisis

Increased Number of Renters

Since a number of owners either lost their homes or abandoned their mortgages during the financial crisis, there has been a marked shift in American renter demographics.

This shift has been most pronounced on the East and West coasts, where there has been a large increase in the renters. Las Vegas specifically has been hit the hardest, with the total number of renters increasing from 30-50%.

Areas that have seen the least difference in their number of renters include the areas of Buffalo and Long Island in New York, the Hartford region of Connecticut, and Boston, Massachusetts.

While overall there are still more female renters than males, it has been reported that male homeowners were 3x likelier to have made the move to a rental property.

Individuals of Hispanic ethnicity have also flooded the rental market at a rate higher than other ethnicities.

Additionally, adults aged 26-34 are buying fewer houses (in general) when compared to ten years ago.

Expensive and Expected to Rise

Because of the increased demand for rental properties, rental prices have risen dramatically. In general, the average rent check has been calculated to have risen 22% in years following the housing bus. This statistic was calculated using data from the top fifty largest housing markets in the US.

A new study conducted by the Harvard Joint Center for Housing Studies and Enterprise Community Partners predicts that the renting population of the United States will rise to approximately 4 million within the next 10 years.

Current rental vacancies sit at approximately 7% with ¼ of renters paying amounts equal to 50% (or more) of their wages. Harvard Joint Center estimates that this will only get worse in coming years.

In a best case scenario (where housing prices and income rise accordingly with inflation), the number of renters paying 50% or more will increase by more than 10% (which equates to over 13 million) by the year 2025.

To put this into perspective, prior to the financial crisis, the average individual was putting 29.7% of their income towards rent, an amount which peaked at 31.5% in 2011.

As a general financial rule, a person should never be putting more than 30% of their income towards housing. A 50% amount is astronomical.

Limited Options

Housing critics have stated that there is a large market for housing which the current American “bifurcated” housing supply currently does not meet.

People looking for places to live are generally restricted to brand-new single-family homes or tiny, overpriced apartments in high-rise buildings.

In light of rising rental prices, there has been an increased interest in building different types of housing to accommodate a wider scale of consumer needs.

Developers have been looking into “missing middle” housing, which refers to the medium-sized residential structures that sprung up around the United States between the years of 1870 and 1940. These include two-flats, duplexes, triplexes, rowhouses, bungalow courts, and more.

Missing middle housing proponents have unfortunately been faced with residential density zoning issues, as well as high building costs (resulting from a lack of builders).

Examples of Missing Middle Housing

WHAT YOU NEED TO KNOW ABOUT MISSING MIDDLE HOUSING

Many Americans are unaware that they are being limited by decreased numbers of missing middle housing, numbers that have been decreasing steadily for the past thirty years.

DEFINITION

“Missing Middle Housing” is a term coined by Daniel Parolek, an architect and urban planner from Opticos Design.

The missing middle refers to the early 20th century medium-sized residential structures that exploded throughout the United States between the 1870s and 1940s.

These types of structures include two-flats, duplexes, triplexes, bungalow courts, mansion apartments and more. Exterior areas (such as the yard and parking lot) are generally shared.

Since rental prices have been sky-rocketing nationally, many people are redeveloping an interest in this type of housing, although there have been issues with regards to residential density zoning laws.

This type of housing would accommodate a wider scale of needs than the current “bifurcated” housing system, which is primarily composed of new single-family houses and small rental apartments in high-rise buildings.

CHARACTERISTICS

Missing middle housing will generally display the following characteristics:

  • Lower prices than single-family homes due to a smaller size and shared lawns and/or parking lots
  • A general residential density somewhere between 16-30 units per acre, however, smaller housing units are often less dense
  • Generally do not consist of more than fourteen units
  • Often “integrated” into areas with single-family homes to create diverse housing options
  • Can increase neighborhood density to support local convenience stores and transit options (for which many planners require at least a density of 16 units/acre)
  • Have become much less popular (hence “missing”) during the 1940s
  • Can be more profitable than renting larger living spaces

PROMINENCE

According to the 2014 U.S. Census Bureau, only about 19% of American housing structures represent the “missing middle” type of dwellings.

While the missing middle types had their heyday during the early 19th century, they had lived on until fairly recently.

Only thirty short years ago, approximately 1/5 of all newly sold houses were categorized as attached. This number dropped to only 10% by 2014.

 

EXAMPLES

Examples of Missing Middle Housing include:

The Selby Live/Work Building (Buena Vista, CO)

Jed Selby and Kate Selby-Urban found themselves interested in the social connectivity that missing middle housing provided. Working directly with Opticos Design, the siblings produced a structure that was compact and adaptable, all the while maintaining its attractiveness.

The Selby Live/Work Building has been described as a “microcosm of South Main’s aims as a whole. [It] unites traditional design with modern technique, and allows for the kind of personalization that makes a house into a home”.

Hamilton Square (Novato, CA)

Set to be built on a 2.5 acre area formerly home of the Hamilton Air Force Base, Hamilton Square is being designed by Opticos Design for West Bay Builders. Using four and five-plex buildings, as well as courtyard housing and live/work units for inspiration, Hamilton Square will be a beautiful piece of Spanish Revival style art.

The site is set to feature a tile roof, iron balconies, and stucco-coated exterior walls and chimneys. The majestic 4,380 square-foot center is set to be equipped with a postal pavilion.

THE 2007-2008 HOUSING BUST

A BASIC BREAKDOWN OF THE 2007-2008 HOUSING BUST

In order to comprehend current housing circumstances in the United States, it is first necessary to have (at least) a basic understanding of the cycle that led to the housing industry bust during the financial crisis of 2007 and 2008.

There were five groups of individuals mainly involved:

FAMILIES/HOMEOWNERS

To buy a home in the past, a family was required to save a 20% down payment. If this could not be done, they were required to purchase mortgage insurance.
An interested family would save their 20% down payment and visit a mortgage broker to buy a house

MORTGAGE BROKERS

A mortgage broker is an individual who connects potential homeowners to a lender.

While they are not always needed, a mortgage broker can often find better rates than those that are available to the general public.
Brokers get a commission for connecting buyers with lenders.

LENDERS

Lenders are the individuals/organization who have provided the money for the house.

These lenders can then sell these mortgages to an investment banker for a generous profit.

INVESTMENT BANKERS

As the banker collects the new homeowner’s monthly mortgage payments (with interest), he gains financial leverage. This can be used to buy even more mortgages and create even more money.

The investment banker organizes these mortgages into categorized packages. If the owners are likely to be able to make their payments, they are marked as safe. The other two categories are for okay and risky mortgages.

These packages are called collateralized debt obligations (CDOs).
The banker is able to sell these CDOs to investors.

INVESTORS

Investors that are looking for a safe source of income can buy the “safe” mortgages which have a lower return rate. This rate is not a problem for them though, because the payments are likely to keep coming in.

Riskier investors can buy riskier mortgages for higher rates. If they homeowners are unable to make the payments, they will have still gained a hefty sum from the high interest rate.

If the investor got stuck with the house, they could simply sell it for a higher profit as houses had not dropped in value since the Great Depression.

These five groups of individuals got immersed in what is called irrational exuberance. This is defined by Robert Shiller as a “heightened state of speculative fervor”.

Essentially, everyone was functioning on the premise that housing prices would never fall. Investors wanted more CDOs, so investment bankers needed more mortgages, and as such, brokers needed more potential homeowners.

To make buying a house easier, many lenders lowered the standards
required to obtain a mortgage. These types of mortgages were referred to as “subprime” as they oftentimes did not require a down payment or proof of income.

Once the mortgage was sold to an investment banker though, it was out of the lender’s hands. And after it was packaged into a neat CDO bundle, the investment banker would just sell it off to the next investor.

The whole process has been described as a game of hot potato in which everyone believed themselves to be secure.

But there was a problem.

People began to default on their mortgage payments and lose their homes. As more people did this, the number of available homes increased. This began to lower their value.

Homeowners who were making their mortgage payments saw the value of their home decrease, as neighboring houses were foreclosed. They were now stuck paying debts much larger than the amount their house was worth.

As a result, these paying homeowners also walked away from their mortgages, making the problem even worse.

federal reserve rate hikes

TOP THREE THINGS TO KNOW ABOUT THE UPCOMING FEDERAL RESERVE RATE HIKES

Following the dotcom bust in the early millennium, the United States Federal Reserve viciously slashed rates in an effort to avoid a recession.

Their method seemed to have been successful and, as the lower rates worked their way into the market, the economy expanded.

Since this time, Americans have witnessed the bursting of the housing bubble and the financial crisis of 2007-2008.

December 2015 marked the first time the Federal Reserve had raised taxes in nine years and many people expressed worries.

To ease your nerves, I’ve compiled a list of the top three things you should know about the upcoming Federal Reserve hikes.

HIKES WILL BE GRADUAL

As mentioned, December 2015 marked the first time the Federal Reserve has raised the interest rates in nine years.

The Federal Open Market Committee reportedly predicts that interest
rates at the end of 2016 will be sitting at 1.375%, which reportedly means at least four more hikes between now and then.

Since the Federal Reserve raised the interest rates in December, the economy has seen a downturn. Oil prices have dropped, the stock market has been uncertain, while the global economy is rife with signs of potential trouble.

If this continues, the hikes will likely be delayed until the economy regains its traction. However, if these conditions prove temporary, the Federal Reserve has publicly stated that it will be “ready to hike rates more quickly than anticipated”.

THERE’S TIME TO PREPARE

Greg McBride, the chief financial analyst at Bankrate.com, has stated that “the rising interest rates will take some time to show a cumulative effect”

With more than 41% of surveyed Americans admitting to being worried about the hikes, McBride states that now is the time to prepare for any potential stir-ups.

Despite the gradual effects of raised rates, the vice-president of Ross Mortgage Company (in Franklin, Massachusetts) has stated that “even something as small as one-eighth increase in interest rates can alter the affordability [of a house] for countless consumers”

And indeed, McBride advises consumers to attempt to refinance away from an adjustable rate mortgage to a fixed to one with a fixed-rate, and to locate 0% balance transfer credit card (if possible).

When the Federal Reserve hikes their short-term interest rates, banks and other lenders tend to follow suit.

HIKES ARE A SIGN OF A GOOD ECONOMY

People often fear a rise in interest rates without considering the hike in its proper context. When the economy is doing poorly, rates are lowered to promote spending and to deter a recession.

Rates tend to rise when an economy is in good shape, and a good economy generally includes a “healthy” housing market. Considering the recent financial instability the US has been experiencing, these hikes may be quite a way’s away.