As a real estate professional, you most likely already know that you can deduct as many rent losses as you would like and you do not need to pay the 3.8% net investment income tax on your income. You can save on taxes whether you make or lose money. And just last week, it got even better.

The US Tax Court ruled last week that a trust qualifies as another exception for real estate professionals. This case focused on a trust entitled the Frank Aragona Trust which owned and developed real estate rentals and real estate properties. The rentals acquired many losses between 2005-2006. Then the trust deducted federal income tax as ordinary nonpassive losses because it identified itself as real estate professional. Just his month, the US Tax Court ruled disallowed these losses.

Since the trust could not count itself as a real estate professional because less than half of the work put in that year was not real estate-related and because less than 750 hours of work related to real estate was performed, the court disallowed these losses. The IRS, however, argued that this is unfair to the trust because it can never meet the first requirement. The US Tax Court fired back and overruled the IRS because a trust is compiled of trustees who perform work in real estate and therefore can combine their work activities together to meet the requirement. The Frank Aragona Trust is made up of six trustees whose work activities can be added together.

This case is a huge win for trusts that own real estate. However, the IRS can (and will likely) appeal this decision. This appeal could also include detailed regulations, issued by the IRS, on the matter.

To find full documentation on the case, you can go to USTaxCourt.gov.

More often than not, landlords will post to social media about their next big event or any other blog post they see online relating to their business and will typically get a dry reaction. Many people find this annoying or just plain boring. But in 2012, social media advertising changed when memes rose to fame.

What Is A Meme?

A meme, in general, is an idea that is passed around the internet due to its relevance to the culture. This meme can be a picture or a video or something like that. The term was first coined in 1976 in the book The Selfish Gene by Richard Dawkins where the meme was defined as “tunes, ideas, or catch-phrases” that spread like “leaping from brain to brain.” Now in 2012, a wide variety of memes have taken over the internet. And companies can use them to their advantage.

Benefits of Advertisting with Memes

Relate to Prospects

The public feels that landlords talk down to them in their advertising, which is a major turn-off. Those landlords who are followed on Twitter are unfollowed quickly once the follower finds out you only tweet about business-related matters. You want to be the landlord that not only relates to the 20-somethings, but also appears very knowledgeable about apartment rentals.

Reel in Young Adults

This is a big one. Memes are a great way to reel in this demographic. This generation has a tendency to gravitate towards images that are compelling, relatable, and hilarious. They also like to share funny images with their friends. You will not only reach the 20-something who found it, but also his friends who are probably in the same boat as he is in terms of their next step of adulthood.

Easy to Share

Since memes are so relatable, they are so easy to share among people of different genders, ages, educational backgrounds, etc. You will hit a variety of people with meme-infused advertisting.

One word of caution as you decided which meme to use: be careful. Know your audience, know the meme, and make sure your meme is not too offensive or off-topic. These mistakes can cause big losses for your business.

With graduation slowly on the horizon and as young adults move on to the next phase of their life, you may find many prospects who have no rental history or do not have a good credit score. You may feel uneasy. If this is you, you may want a co-signer.

What is a Co-Signer?

This might not be new information, but a co-signer is a person who signs a lease and thus becomes a party to the rental agreement. Co-signers are equally responsible for the terms of the lease as the actual tenant. No 50/50. Both 100% responsible. In most situations the co-signers does not pay rent. But this depends on the circumstances and determined between the co-signer and the tenant. What matters is that the rent is paid in full and on time.

Benefits of a Co-Signer

For the tenant, a co-signer can give the tenant the opportunity to rent a unit of yours. So what are your benefits? You can work with the co-signer to get your rent payments if they are late. Let’s say your tenant is a young adult fresh out of college with the co-signer being their mother. Since you have the mother’s contact information, you can reach the mother and explain the current situation when phone calls and notices to the tenant do not work. The payment arrives shortly afterwards. Of course this won’t be the situation with every young 20-something, but it’s good to have a co-signer to protect yourself.

You Should Get A Co-Signer If…

…your prospect suggests it. It is always a good sign of a responsible tenant. It is also additional insurance for your business. You should also get a co-signer if this prospect has no rental history or if they have gone bankrupt. Another name on the lease could alleviate any fears of late payments. A co-signer will always bring in that bit of additional insurance.

If you do decide to get a co-signer, remember to screen them the same way you would do with any prospect. Give them the application, complete a background check – whatever is included in your process. Just because they will act as the co-signer does not mean you can trust them with no knowledge of their history.

Screening prospects is crucial to your business. While face-to-face meetings help greatly, a look at past behavior can assist greatly in determining if this prospect is a great fit. Here are some reasons why all that background research is worth it:

1. Pets

Pets are often the pride and joy of tenants. A pet’s behavior does not always match up with their owners’ description. Contact their previous landlord to get straight-forward, honest answers.

2. Criminal Past

Rentals associated with criminal activity always hurt your business. Anything ranging from property damage to in-rental meth labs to illegal drugs can drive prospects far, far away from you. Run a background check on the prospect to check for any criminal activity.

3. Late Payments

As you already know, late payments are a pain. Chasing down tenants via phone, email, posting notice, and other alternatives is mentally exhausting on you. Again, contact their previous landlord to receive information of their payment history.

4. Breaking Lease

If your prospect’s last living situation involved a broken lease, make sure you do thorough research into this matter. Many factors, determined by your prospect or others, could have gone into the broken lease. It is not always your prospect’s fault. But if it is, it’s vital to note this.

5. Property Maintenance

This is especially important if you have standards for your residents, i.e. changing filters. A responsible tenant will take away any stress you have concerning property maintenance. Clogged filters or a worn-down water softener can impact your relationship with your residents.

6. Credit History

This is a big one. This all goes back to number three. Again, you want a responsible tenant. Credit reports are available to landlords for only $10. However, even after looking at their credit report, remember to research any circumstances surrounding occurrences like foreclosures.

7. Eviction

The most important factor regarding prospects is their eviction history. Have they ever been evicted? Take the time to research why. Again, contacting their previous landlord is a great way to get the information needed. If the prospect has a substantial eviction history, you could lose money. Court-ordered evictions take months to process. During this time, you cannot move in a new tenant. Keep this in mind.

To sum it up, tenant screening is vital to your success. A bad tenant could cause negative Word-of-Mouth, hurting you and potentially your current tenants.

The initial phone call with potential renters is critical to gaining business. It is crucial that those in the real estate business are comfortable with talking on the phone. Phone anxiety can greatly hurt a real estate business. Here are three common sources of phone anxiety and ways to solve these problems:

1. “I’m not comfortable talking to strangers on the phone!”

The only people you are speaking with on the phone are strangers. They come from various backgrounds and they will be of different races, religions, ages, and genders. Some may even have a speaking disability. Some phone calls will be harder than others and that is okay.

Remember that the person you are speaking with is another human being – just like you. Both of you are at an even playing field. But, you’re the boss. Guide the conversation.

2. “I don’t know how to get the right information!”

Understandably, it’s an easy mistake. You have the rush of excitement when you get a new prospect, but forget how to ask the right questions in the moment. Then you’re left with no information to benefit you and your business.

To solve this, jot down 15 relevant questions to ask the prospect. This you could do right now. C’mon. Get out a pad and pen. Keep it somewhere you can easily access it. This way you can make an offer or run far away from the client ASAP.

3. “I lack confidence!”

In order to have a good conversation with a prospect, you must have confidence. Your first call should be about getting to know the client, not impressing them within ten seconds. That is not how these situations work.

Review your material. Know your properties. If you’re unsure about a policy, research it. And relax. This phone call does not determine life or death, even if you think it does.

Above all, practice. This is the best way to solve all three of these problems. Practice scenarios of typical prospect calls. Practice what you would say if the conversation starts going south. You will be better prepared next time the phone rings.

While searching for a new rental, potential renters look for that great first impression. After all, this rental will be a large part of their lives for a good number of years. How do you write that rental description to keep them interested and keep you at the head of competition?

SPELL CHECK

This is an obvious one, but overlooked many times. Time is ticking away. You need to get that property up to view. However, do not sacrifice a simple review in order to get your property out to the world before your competition introduces theirs. The world’s mental scan for grammatical errors has increased. Renters want a trusting landlord who pays close attention to detail and cares about their renters. Grammatical errors show disinterest and carelessness. And then off they go to your competition.

And while this next suggestion will induce a groan from you, I will give it to you anyway. You need to use a spell check of some kind. Even after reviewing your description over and over again, it’s always a great idea to have another eye glance over your words. Spell check provided by programs like Microsoft Word does the trick, but having another human eye look over your work is just as helpful.

WORD USAGE

Be cautious as to what kind of words you use in your description. While you want to appear friendly to your potential renters, you don’t want to appear unprofessional. So do away with slang words. Another tip is to use words that excite your renters. So get out that thesaurus that’s collecting dust somewhere in your home or office (or go online and find one) and search for terms that will generate excitement in your renters. For example, “old-fashioned” is one thing. It’s accurate, but doesn’t provoke buzz. Replace the term with “vintage”, however, and you will paint a beautiful picture for your potential renters.

Above all else, make sure your description is honest. Don’t use sophisticated terms for your property if it doesn’t exactly contain elements of that term. One inaccurate description can greatly affect your business. Word-of-Mouth is more powerful than you think.

I hear all the time the comment, “I thought my previous software was going to make my life easier, but it just gave me more frustration”. Property management is hard enough by itself without having to struggle with slow software, missing data, constant questions, and a difficult learning curve. Hopefully, I can address some of those problems for property managers here.

Make sure it works the same way you do

First, if you can’t try out the software before you buy it, run the other way! That is the only way you can be sure it is right for you. When you do try the software, start with one task, such as “I want to charge rent to my tenants”. Then, see how long that task takes. If is more than 10 seconds, it is too long.

How about this? “I want to update the Tenant’s rent amount, and then correct an amount that I accidentally posted to the tenant’s accounting”. Here is where programs like the Tenant File software stand out – many programs make you navigate to multiple menus to do common sense tasks. While this could take a long time with other software, the Tenant File makes it easy by having the Owner, Property, Unit, and Tenant information on the same screen as the ledgers. The above task would involve just 3 clicks from the home screen of the program, to find the tenant, open the ledger, and easily make the change. (I timed myself and both corrections took 8 seconds).

Keep your valuable data with someone you trust – you!

If you keep your own information, it will be safer. Find a program that allows you to make a backup of your valuable data quickly and easily. It should be as simple as clicking a ‘backup’ button then pressing ‘go’. If not, maybe that software is not for you.

Don’t get more or less than you actually need

Another common complaint I often hear is that the customer had previously paid ‘thousands of dollars’ for another complex software, yet they only manage a few rentals. Or, on the other side, they manage over 100 rentals and the software they have is just too limited. Ask the vendor their average number of rentals per user, and the market they strive for. You need powerful features in your software without paying too much. At the same time, avoid ending up with overly complicated requirements with features you don’t need.

Common sense assistance

With any new software you need a little help. Avoid companies that don’t provide a phone number or any free support – eventually you will need some assistance. With the Tenant File, we provide free phone support during the first 60 days while you are learning, then free web support after that, for all users even 3 versions backward.

Follow these common sense guidelines, and your property management software investment will help your business run a lot more efficiently, smoothly, and stress free.

Here at the Tenant File, we have all been working really hard to finish the next major update and keep up with the demands of the season. The next major update should be out in early 2014.  Last month we released the new 1099 MISC Program, which required an update due to changes made by the IRS. Everyone that pre-purchased the 1099 MISC last year should have the new release by now. The program is only available by download, so that our customers can get it quickly.

Also, we have been working with Revo Payments on improvements to the DirectPAY system, updating the RentalWIZ service with new partners, adding new Tenant Screening options and more, including some super secret ‘too soon to announce’ projects. So, we expect good things in 2014!

Most importantly, we have all been enjoying being with friends, coworkers,  and family this holiday season. We all need to work hard and be the best that we can be in the business world, but what really matters is what we do to make the world a better place. That can be accomplished by simply staying in touch with loved ones, remembering your friends, and being kind and considerate to others. We’d like to thank our customers and wish all of you the very best during these holidays and the upcoming year. And don’t forget that we always want to know more ways that we can improve the Tenant File Property Management Software to make it better for you!

Merry Christmas and Happy Holidays!