Winter is here, and if that utility bill is high, you are probably already troubleshooting problem areas of your home. One of largest contributors to drafty rooms is a lack of insulation. Insulation is designed to stop air passage through ceilings, walls, and the floor. The intention is to keep the right air where you want it in each season. Obviously, the windows and heating source are also important to maintaining an overall energy efficient program, but having the right insulation is a key factor.

In existing homes, it can be difficult to go back and insulate after the fact. If attic space allows, you can blow-in insulation. Under-floors and in-between walls can be difficult as well. Even with your best efforts, there is bound to be some location that is hard to reach. What if you had a product that you could apply from the exterior?

Sound a bit like science-fiction? SFGate highlighted the ingenious concept of Nansulate this past November. It is a paint-on insulation that suspends specially engineered particles with low-conductivity in an acrylic base. The particles are water-resistant, making the paint a weapon against mold and mildew. Unlike traditional fiberglass insulations, this new product is non-toxic and environmentally friendly.

So how green is this product? The company promotes it as a major breakthrough in green endeavors. Not only does it contribute to creating more energy efficient homes, but they also make this statement regarding the safety of the ingredients: "Nansulate® coatings contain none of the ingredients contained on the EPA listing as Class I or Class II Ozone Depleting Substances, nor do they contain any ingredients on the listing for Global Warming Potential (GWP) that are non-ozone-depleting." The company is anxious to become accepted into the green marketplace. "We are pleased to see that our Nansulate coatings are becoming a brand name in the sector of Green Nanotechnology," stated Francesca Crolley, VP Operations & Marketing. (Nano Science and Technology Institute)

Sounds like a pretty good idea, but is it affordable to the average homeowner? Surprisingly, it is actually quite affordable. At $66 for 150 sqft of coverage, it is an inexpensive alternative to other forms of insulation. Especially if you take into account the ability to avoid opening up walls or crawling under houses. The paint can be applied with a brush, sprayer, or roller. It is applied to walls, windows, pipes, and water heaters, and can even be applied over existing paint.

Because this is a fairly new product and its composition is so different from traditional insulation materials, it is hard to do a straight-across-the-board comparison between the two. So far, however, those who have already used it report a 20-40% savings on their utility bills.

A relatively new product, the company is working hard to bring awareness to its presence. I, like many, was initially skeptical. It sounds a bit too easy to be effective. They offer several case studies to promote its efficiency, but each of us will probably have to try it firsthand before we are believers. It definitely sounds like it is worth trying-out. Fairly easy to install, why not see how it can help your energy efficiency this season? Request free estimates from a skilled painting contractor in your area to see what this product can bring to your home. More information at: CalFinder Remodeling

Q. We recently bought an older home which has undergone some renovation. The sellers installed three-pronged outlets throughout the house and GFCI circuits in the kitchen, bathrooms and on the exterior. Our home inspector said that the house wiring is the original two wire non-grounded system, and that even though we have three-prong plugs they are not grounded. He also said that the GFCI receptacles would not function correctly, because there is no ground wire. Do you agree with his assessment?

A. Your home inspector is correct in telling you that your outlets will not be grounded. A third or ground wire is necessary for proper grounding of receptacles and fixtures. Having a two-wire system is not a problem in and of itself unless you are using electrical equipment specifically designed to be grounded. The three-prong plugs are more of a convenience since nearly all electrical devices now come with a grounded plug. Regarding the GFCI (Ground Fault Interrupter Circuit) outlets, they need not be grounded in order to work properly. Simply put, the GFCI is a safety device that protects people from electric shocks by sensing current moving in a way that it should not, and instantly shutting down the circuit. On a grounded circuit, it does this by sending the current to ground. On an ungrounded (two-wire) circuit, it does the same thing by sending the current back to ground through the neutral wire. A properly wired GFCI will work just fine on a two-wire circuit. The GFCI outlets have test and reset buttons on their face. To test for proper operation, simply push the test button. If you hear a snap, the circuit has tripped, and you can test it by plugging in a lamp or radio. To turn the power back on, simply push the reset button. If you are still not sure, call a qualified electrician and have him check all your GFCI receptacles.

The old days of harsh bleach and chemicals used to clean around the house are slowly fading out. Along with this trend is a desire of many consumers to adopt more environmentally friendly products for their home. This can be anything from the new countertops and floors to the groceries bought at the local supermarket. In addition to what you bring in (and take out) of your home, the maintenance of your home can is a way to become more green. According to the energysavers.gov website, "Americans spend more than $160 billion a year to heat, cool, light, and live" in their homes. Everyone may not try every option or may find their budget does not allow for all of the products available. However, a few home improvements and informed purchases can not only save you money in the long run, but these changes can also provide a healthier home for your family and the planet. Initially, all the options to create a greener home can be overwhelming. But some tasks are good home maintenance and a few only need to be done once. The headings below is just one way to break down some of the improvements and updates you may make to your home which will effect its impact and performance. Did we say performance? You bet! Making sure your home is running efficiently and smoothly is the number one way to helping the environment! How efficient is your home? Making your home work efficiently to keep you warm, cool and provide you with creature comforts is the perfect way to help other creatures of the world. Taking time to keep your home updated will help reduce the amount of energy you need and ultimately be easier on your wallet as well. Lighting: You can cut electricity costs by taking advantage of natural lighting and choosing carefully the lighting you purchase. Natural light is a great way to improve your home's efficiency. Skylights and easy to open window treatments can help you better regulate where you get your light during the day. Windows facing north and south can offer a great source of natural light and heat. West and east windows will offer light but may produce too much glare as the sun rises and sets. Choose your artificial lights carefully. Selecting a few accent lights and then a concentrated task light for an activity such as reading is a better alternative to lighting up every square inch of the room with florescent bulbs! Using environmentally efficient light bulbs can help reduce energy costs. However, research the bulbs you buy. Some may not work as well for task lighting. Others may not work with your older lamps and you may be better buying a new lighting fixture at the same time. Keep your artificial lights working at their best. Even the simple task of keeping your lamp shades free of dust can improve the light quality in your home. Windows: The windows of your home can be a great ally. Getting the right type of window treatments can help regulate your home temperatures. Drapes: Drawn closed in the winter, these window treatments can help prevent heat from escaping by as much as 10%! Drapes can also help decrease heat coming into the home if closed against direct sunlight in the summer. Blinds or Shades: These can help reduce the amount of heat coming through the window because of direct sunlight. Dual shades can be very useful. Use the light side to help reflect and keep out the warming sun in the summer and the dark side can be used in the winter to draw in more heat. Shutters: Both exterior and interior shutters can be used to keep heat out in the summer. They do not work as well at keeping heat in during the winter. Another perk of having exterior shutters is that they can provide extra security for your home as well. Window Panel: Similar to a shutter, a window panel is a product that pops into the window frame and provides extra insulation in the winter. An inexpensive addition, this may be ideal for windows not used for their light in the winter. Screens: Although these don't really keep any heat in place, using screens on your windows allows for better cooling and airing of your home in the summer. Screens allow you to keep windows and doors open encouraging a natural movement of the air. Using open windows well in the morning and evening can drastically reduce your air conditioning bill. Thankfully this can be done without letting in all the bugs and critters! Awnings: Window awnings can help keep the house cooler in the summer by reducing the amount of heat that is adsorbed. Air Leaks: Get rid of air leaks! Insulation works to improve both the heating and cooling of your home. Check around your doors and windows first. Many leaks escape through these portals the most. Replace weather stripping and caulk where needed. Besides the doors and windows, also check for air leaks around vents, fans, phone and cable lines, and electrical lines. Depending on the materials used in your home, you may also need to check any brick, stucco or cement construction for needed repairs. Not sure if you have a leak? One option is to use an incense stick. The smoke will show any movement caused by air leaks. Another method is to have someone stand on the other side of the possible leak source while you shine a flashlight at the edges. If they can see the light on the other side then some updates should be made. Insulation: Updating or adding insulation to your home, especially an older one, can help reduce costs associated with heating and cooling your home. The attic, crawl space, basement, exterior walls and space around service ducts are the areas that will need the most attention or improvement. Reduce Water Usage: There are many ways to reduce your water consumption around the home. The hot water heater can be an energy hog. Try insulating it if it does not already have at least R-24 insulation. You can also lower the temperature of the water from 140°F to 120°F to save on cost. Make certain to fix any leaky pipes or faucets. Over time these will not only consume water but will also cause damage to the surrounding area. To get better use of water for your money, consider installing low-flow water faucets and showerheads. You may also consider a water (and energy) efficient clothes washer. What do you bring into your home? Whether building a new home or shopping for the weekly groceries, the products you choose to bring home have a great impact on the environment. Taking some time to consider your choices before you buy is a great way to reduce your carbon footprint. Renewable Construction: If building or remodeling a home, consider renewable sources for some of your construction needs. You do not have to use all or any of them, however, if you take the time to research some of these options, you may be surprised and find a good fit. Hardwood floors are great in that they keep allergies as bay and are easier on the environment then synthetic carpet manufacture. However, a renewable wood is key here. Renewable floors such as bamboo or cork are much easier to replenish. Another option that has gained in popularity is reclaimed wood. This product is taken from demolition sites - everything from an old house to an old gymnasium floor. Research the product's history as some sealants and paints used on the wood may be toxic. There are more renewable sources available. From recycled glass used as tile to recycled jeans used as insulation. Take a look at our links to the right for more information about these items and possible vendors in your area. Buy Local: There has been a lot of encouragement for consumers to buy local recently. Buying locally should help cut down on shipping and packaging costs. Doing so can also help local farmers and businesses. Not always the cheaper option, trying to purposely buy some items locally can help the economy and ultimately the environment. In fact, some believe buying groceries from local sources provides fresher produce that ultimately could be better for your health. Quality of Product: Being a savvy consumer who expects the best quality in their products is helpful to the environment as well as your pocketbook. Move away from cheaply made items; instead research your purchases and get ones that will perform well for a long time to come. Check Labels: On anything you buy, take time to check the labels and be aware of any impact it may have on your environment - including at home. Consider carefully your choice in chemicals used for cleaning. When working on home improvement projects consider the options you have for glues, paints and other possible hazardous materials. THERMOSTAT: Lower your thermostat by a few degrees. Get a controller where you can specify different temperatures for day and night. LIGHTS: Turn off incandescent lights when not in use. Turn off florescent lights if you will be gone for more than 15 minutes. Optimize your use of natural light with work or reading places near northern or southern windows away from eastern and western sun glare. ELECTRONICS: Turn off power strips if nothing on the strip is in use. Unplug unused electronics. COMPUTERS: Turn off your computer monitor if you will be gone for more than 20 minutes. Turn off both your computer and computer monitor if you will be gone for more than 2 hours. Use the sleep mode if your computer has one. ENERGY: Consider purchasing green energy from your power company such as solar power, wind power, biomass power, geothermal energy or hydropower. If your power company does not have one of these options available, you may still be able to invest in future programs. LAUNDRY: Wash your clothes in cold water when possible. Clothesline dry your laundry on sunny days. Shop for detergents that list which toxic chemicals are not in the product. A generic statement such as "non-toxic" may be gimmick so read the label carefully. GROCERIES: Shop locally. Use a cloth reusable bag for groceries. COOKING: Use cookware that cooks at lower temperatures such as cast iron or clay. Save your baking for cooler hours. DISHES: Only run the dishwasher when it is full. Run the dishwasher at night. GARDEN GREEN: Check out our article on environmentally green gardening. Or see our article about pet safe gardening.

Big events and holidays can often mean big spending. A little pre-planning can help to ease and avoid financial pain. To the left are some worksheets that may be used when planning holiday or big event spending. In the meantime, here are some other tips for not overspending:

Set a Limit - Before any spending spree begins, make sure you know your limit. Set your cap a bit below as last minute expenses may arise. Did you account for mailing the gift? Gift wrap? The unexpected can creep on you before you know it! Also, take a look at how much you have spent in the past. Was it too much? What expenses surprised you? Asking questions like these will help you plan for the holidays and events to come.

Make a Gift List - Instead of hoping for something to catch your eye, keep a list of gift ideas. This way you will know what you are looking for and be able to better preplan the budget. This will also prevent buyers remorse - sometimes that gift that seemed like a great idea when you were in the store may not be so great when you sit down to gift wrap it.

Pay Cash - Credit cards are easy to use but not all of us are good at paying them off as soon as the bill comes. Taking cash helps you stick to your budget. Another alternative is the prepaid credit cards that you load with a limited amount in advance. Many also find these pre-paid credit cards a nice alternative to use for online purchases for extra credit protection.

Shop Early or Late - Depending on how far in advance you like, plan to shop either in advance of the holiday season or post-holiday season with the next year in mind. This will allow you to stick to a budget and not get caught up in last minute buys. It will also relieve a lot of the stress that comes with shopping during the busiest shopping days of the year!

Allow Time for Shipped Gifts - Plan ahead if you are shipping gifts to friends and relatives far away. Waiting until the last minute will mean more expensive postage to get gifts to the door on time.

Take Time to 'Comparison Shop' - Some of us get our list together and then just want to get it over and done with. Be patient, compare store prices and options before you go out to buy. This will help stretch that budget further.

Be Creative - Have fun with your gift ideas. Consider homemade or crafted gifts; however, don't forget the time involved making these items! Or make your own gift baskets - know a lot of chocolate lovers? Instead of buying a pre-made gift set - make your own basket of local chocolates or goodies.

This month, for a change of pace, we are bringing you a LAWCHEK™ ALERT! from our partner and legal site Lawchek.com. This article reviews the questionable changes that have occurred relative to bank "holds" on customer deposits. These changes can effect everyone from the individual customer to the small business owner.

CUSTOMER DEPOSITS: ILLEGITIMATE REVENUE STREAM FOR BANKS?
Richard A. Pundt, Attorney at Law

For quite some time now, certain banks and other financial institutions may have been profiting from what some members of Congress are calling an illegitimate revenue stream, namely, the deposits of its' customers. Today, many banks will place “holds” on customer deposits. Such customer deposit “holds” are for ten business days and usually translate into a ½ month use of the funds deposited; In this way, banks are able to benefit from the interest on customer funds. This questionable practice has caused outrage by depositors and has ignited the concern of key members of Congress.

Congressman Michael Oxley (R-Ohio) has stated: “Holding a deposit to ensure its safety and soundness is reasonable. But holding a deposit in order to profit from the interest is completely unacceptable. The latter practice prevents consumers from realizing the benefits of their own assets, while creating an illegitimate revenue stream for financial institutions. It unfairly penalizes consumers and should be eliminated from the U.S. payment system.” 1

From an analysis in a report by Ms. Laura Bruce of www.Bankrate.com, it is revealed that there are many concerns relative to the new federal enactment of the Check 21 Act. "Check 21" allows the checks that individuals write to clear within one to two days while the deposit may be held by a bank for up to ½ month when weekends are added to the allowable ten day hold under “exceptional” circumstances of the FED Regulations. As a result, the consumer may get “nailed” for overdraft charges if the consumer was counting on the deposit and, in addition, the banks have been keeping the interest on the funds “held” through the deposit delay. Ms. Bruce also notes in her article 2 that Congresswoman Carolyn Maloney (D-New York) has introduced HR 5410 that would “…redress imbalances between the faster withdrawals permitted under the Check 21 Act and the slower rates for crediting deposits.”

Examples of bank customers delays due to the banks “hold” practices is very wide-spread and, undoubtedly, has accounted for hundreds of millions of dollars worth of profits for banks. Consumers, realtors, businessmen, and attorneys are becoming increasingly aware of these practices by the banks. This author has encountered quite a number of reported instances where consumers experienced an improper deposit delay or hold for an unreasonable period of time.

Of the many instances reported to this author, there are three that merit review in regard to the issue of deposit “holds.” The first instance involved a very well-respected attorney who deposited over $200,000 into his attorney trust account at a well-known bank and was verbally informed, after the deposit had been made, that there would be a ten business day “hold” on the deposit. He did not receive any written notice as prescribed by Federal Reserve Regulation CC (Availability of Funds and Collection of Checks, 12 CFR 229). This particular attorney had never over-drafted his account and has always maintained a sterling reputation with the Bar, as well as other attorneys. Moreover, the deposit consisted of checks from State Farm Mutual Ins. and John Deere Inc. The attorney directed a hand delivered correspondence to this well-known bank, wherein he requested an immediate removal of the “hold” or, in the alternative, an explanation as to whether the bank in question believed that checks from either State Farm Mutual Ins. or John Deere Inc. would not clear or if there was any improper activity by State Farm Mutual Ins. or John Deere Inc. in regard to: (a) any suspected criminal activity, (b) any suspected money laundering, (c) any suspected terrorist activity, or (d) any other improper activity that would mandate the holding of either check. Needless to say, the bank could not accuse either State Farm Mutual Ins. or John Deere Inc. of any such activity, yet the bank continued its “hold” on the deposit to the trust account from December 7, 2005 until December 20, 2005. The attorney has never received a written or an oral explanation, as he requested in writing, for the hold as prescribed by Federal Reserve Regulation CC (12 CFR 229).

The second instance involved a well-respected realtor who deposited between $200,000-$300,000, as a result of a closing, into his account at the aforementioned bank. He was unaware of any “hold” on the deposit. The realtor issued various checks, as customary, to: other financial institutions, the seller, realtors, an insurance company, taxing authorities, and others. When the bank in question refused to release its “hold,” the realtor’s checks bounced and a significant amount of distress and embarrassment was the result for all parties concerned, except, of course, the bank that profited in two ways: from the interest on the deposit and from the overdraft charges.

The third, but surely not final, instance involved a party who received a Cashier’s Check from a centrally located and well-known bank and, on the same day, deposited the Cashier’s Check into an account at a branch of the same bank. The branch placed a “hold” on its' own main bank’s Cashier’s Check. What is especially interesting about this case, other than the fact that it was the bank’s own Cashier’s Check, is the fact that under Federal Reserve Regulation CC (12 CFR 229), a Cashier’s Check, as well as a check drawn on an account held by the same institution, must be made available on the first business day following the day of deposit.

It would seem that compliance with Federal Reserve Regulation CC (12 CFR 229) is being ignored by several of the largest banks. According to the article by Ms. Bruce, as noted above, proposed legislation HR 5410 has been presented in Congress to benefit the consumer. The legislation is being introduced in order to counter the Check 21 Act that allows the checks written by consumers to clear faster than the actual deposits made at the banks. It is noted in the article that Representatives from Wells Fargo Bank and Wachovia Bank have stated that their banks place holds on less than one percent of all deposits. If one were to consider the dollar magnitude of that one percent, especially if such deposits are for more than $5,000, a substantial windfall of interest profits are the likely result for the banks placing the “hold.” Perhaps the one percent accounts for hundreds of thousands of deposits each day and, if the average dollar amount of such deposit is $10,000 (most likely it is much more), the money on hold by the large banks at any one time would be in the hundreds of millions of dollars for which the banks gain interest on consumers assets, as noted by Congressman Oxley.

Under the Federal Reserve Regulation CC (12 CFR 229), it is mandated that interest should be paid to the consumer (See Regulation CC (12 CFR 229.14)). It is, therefore, understandable why Congressman Oxley has stated that such practice by the banks “…prevents consumers from realizing the benefits of their own assets, while creating an illegitimate revenue stream for financial institutions."

Under Federal Reserve Regulation CC (12 CFR 229), the following deposits must be made available on the first business day following the banking day of deposit: (1) Cash, (2) Electronic Payments, (3) U.S. Treasury Checks, (4) U. S. Postal Service Money Orders, (5) Federal Reserve Bank and Federal Home Loan Bank Checks, (6) State or Local Government Checks, (7) Cashier’s, Certified or Teller’s Checks, (8) Checks drawn on an account held by the same institution upon which the check is drawn, and (9) the first $100, or if less than $100 the entire amount, of all other checks. In the case of the individual who had deposited a Cashier’s Check into an account that was held by the same bank upon which it was drawn, both subsection 7 and subsection 8, as noted above, were ignored.

On other deposits that are not listed above, including the proceeds of local and non-local checks, the checks must generally be made available for withdrawal by the second and fifth business day respectfully following the deposit (See Regulation CC (12 CFR 229.12)). In the case of the attorney, and in the case of the realtor, as noted above, if the deposited checks were local, the deposit should have been credited within two days, and if the checks were non-local, the checks should have been credited within five days. There should not have been an arbitrary hold for ten business days or a ½ month total hold on the deposits.

However, there are exceptions set forth under Regulation CC (12 CFR 229.13), and those exceptions involve: new accounts,3 large deposits, repeatedly overdrawn accounts, or emergency conditions. The only exception of the above examples involving the attorney or the realtor, as given, would be the exception of a large deposit since our investigation ruled out any other scenario. In the case of large deposits, the bank must provide a notice to the consumer (See Regulation CC (12 CFR 229.13)), and that notice must be in writing (See Regulation CC (12 CFR 229.15), (12 CFR 229.16), (12 CFR 229.17) and (12 CFR 229.18)). Additionally, and under Regulation CC (12 CFR 229.14), interest must be paid on interest bearing accounts no later than the day the bank receives credit for the funds deposited.

It would appear that certain banks may be circumventing the requirements of Federal Reserve Regulation CC (12 CFR 229), and that is undoubtedly one of the reasons that Congressman Oxley has expressed concern, and why Congresswoman Maloney is reintroducing HR 5410. As a practical matter, most customers drop the issue once they actually receive their funds, which have been held by the bank, because they wish to maintain a good standing relationship with the bank. So does that mean that nothing can be done? The answer is no. Something can be done, but it requires positive action by the customer.

First, the customer may file a complaint with the Federal Reserve at: The Board of Governors of the Federal Reserve System, Division of Consumer and Community Affairs at 20th and C Streets, N.W., Stop 801, Washington, DC 20551. Additionally, the consumer may file a complaint with the respective State Banking Commissioner in the state where the violation occurs. Also, contacting the proper parties within Congress, such as Congressman Michael Oxley (R-Ohio) or Congresswoman Carolyn Maloney (D-New York).

Finally, there is a civil remedy expressly set forth under Federal Reserve Regulation CC (12 CFR 229.21). The civil remedy allows for both individual and class actions. See Regulation 12 CFR 229.21 (a) (2) (i) and (ii). The statute provides a limitation on class actions that includes actual damages up to $500,000 or 1% of the net worth of the bank involved (the lesser of the two) plus costs and attorney fees.

Perhaps you inherited property or purchased property as a new investment and now you are contemplating becoming a landlord. If you decide to rent an extra piece of property, you should know some ground rules. In this months article, 'How to be a Good Landlord,' we will discuss some of the basics that every landlord should know. We will discuss what it takes to be a landlord, what makes a good rental property, what are your responsibilities as a landlord, how to advertise your property, how to avoid legal pitfalls and how to evict a tenant if the relationship deteriorates. Overall, this is a short list, hopefully it will help you start with a little more direction and know-how.

Do you have what it takes to be a landlord?

The decision to become a landlord should not be taken lightly. Contrary to popular belief, this is not the type of job where you just sit back and watch the cash flow in. Regardless of the challenges, more than half of landlords are self-employed. Doing it yourself will mean you take on the responsibilities of a small business owner. You need to have great communication skills. You will be working with all types of people; sometimes even the difficult ones. Being an effective communicator in person and in writing is vital. You are an accountant. This includes everything from rent payments and deposits to repair and maintenance costs. You are a manager. You may have staff to train and watch over. Their professional behavior reflects upon you and your property. If they are inconsistent with your policies they can damage your business or even get you into legal trouble. You may also need to contract repair or maintenance jobs you cannot complete on your own. You will need to project manage these items through to completion. You are a marketing director. Getting your place advertised and your units filled is an ongoing challenge. Advertising also includes many legal regulations that you should know (more on this below). Your knowledge of this business should also include legal knowledge. Consulting a lawyer is recommended for anyone starting as a landlord, especially since every state has specialized landlord/tenant laws. But in addition to this, you will be responsible in making sure any staff or contractors you use also know the laws when working with tenants. You should be dedicated and patient. Being a landlord is a tough road to start. You should be prepared for hard work with a slow, trickle-in type of income, especially at the beginning. On average, a landlord should only expect about a 10% profit annually. The rest of the monies will be recycled into items such as mortgage payments, taxes, repairs, management costs, insurance, advertising and a rainy day fund (to name a few). There are tax breaks available to landlords, however, these are not enough to turn your profit margins sky-high. These qualities listed above will help you become a great landlord.

Perhaps there is a trait above that gives you pause. "I really don't want to manage all the accounting." or "I don't want to live onsite or nearby." All is not lost. You can hire a property manager. Doing so will cost you about 10%/month of any monies the property takes in. However, it can be a wonderful way to manage your business. When looking for a project manager, treat it like any other contracted service. Perform rigorous interviews, check references and make sure you have the same ideas about responsibilities of each party. Find out if they are insured, if they already have working contracts with maintenance and repair companies, and if they charge any extra fees for these contacts. Once you decide on a property manager, be certain to create a detailed contract covering all responsibilities. As with any of your other endeavors with your rental property, keep all your records and agreements in writing! Other professionals you may use to help manage your property include accountants, maintenance specialists, marketing directors and lawyers. Of course all of these will eat into your profit, but be honest with yourself and utilize these people when you need them. You can save yourself headaches down the road if you strengthen any weaknesses at the beginning.

What makes a good rental property?

When purchasing a rental property, there are some important questions to ask:

Do you have a enough for a down payment? Because rental property is viewed by lenders as a higher risk, you may be asked to put as much as 25-40% down on the property. Lenders calculate about 75% of your mortgage payment will come from renters. This leaves you with 25% to make up and even more if you cannot rent all the units. They may give you the option for a lower down payment at a higher interest rate. However, the higher interest rate may defeat any benefits.

Could you live on the property? If you use one of the units as your own residence this will help lower the risk factor for lenders. Lenders can offer a lower down payment and you can learn the ropes of being a landlord without being far from your investment.

Can you get the rent you need for the mortgage? Take a look at the neighborhood and compare the rental costs. Your rental rate needed to cover mortgage should not be too far above the market or you will lose your ability to rent units. - If you inherited or already own the property, you should consider if you can meet current mortgage payments. It may be more beneficial to sell the owned/inherited property and reinvest in another neighborhood.

Is the building up to code? Make sure to hire a home/building inspector before purchasing the property. Make sure the inspector is aware that you hope to rent the place as this may change some safety and code requirements. Take time to make yourself familiar with codes for your locality. This will help you ask better questions and understand any improvements you may need to make.

Is the property maintained? At first you may think it won't be a problem to repaint, re-roof, update the wiring and plumbing, etc. until your list becomes too long for the investment to be worthwhile. Again, hire a home inspector and make certain you know what needs repair and the estimated cost of repairs before you buy.

Is the property secure? Review reports on neighborhood safety. Check for ample lighting, especially at entrances and in parking areas. Make sure windows and doors are solid. Consider the cost to change all the locks and add window locks. Think about the security of your tenants in the property.

What are the responsibilities of a landlord?

Let's assume you are going to take on most of the business yourself and have found a wonderful property to rent. Now, what are some of the responsibilities you have as a landlord?

Tenant Screening: Your first interaction with possible tenants will be the background check that includes a financial review and calling references. Overall, you must perform background checks fairly. You should not do the check on one person and not on the other as this favoritism, or "trusting your gut feeling," is a disservice to all involved. You owe it to yourself, possible tenants and current tenants to perform fair background checks. For yourself, you can avoid headaches with tenants that don't pay the rent or have caused problems, such as costly repairs, in the past. For possible tenants, you may be providing that reality check - can they really afford your rental? For your current tenants, consistent background checks let them know you are looking after your investment giving them a sense of security. On average, working with an agency, this will cost you about $20 per check; an investment well worth the cost.

Clear, Consistent Communication: To avoid any misunderstandings, make sure all your interactions with tenants are clear.

• HAVE A CONTRACT! Make sure you supply the tenant with a copy of the contract so they may reference it if any questions arise. Review the contract with a renewing tenant and discuss any questions they may have over the language or meaning.
• Collect rent on a schedule. Keeping consistency with your tenants is imperative. If you are too lax one month, you may have a hard time collecting rent the next month. Or, if you are lax with one renter and not another you can create tension or even a legal issue.
• Always provide written notice before entering a tenants space. This varies from state to state. However, for good business practice and common curtsey, let the tenant know when you need to enter the property they call home.
• Use signs, flyers or other WRITTEN communication to inform tenants of policies and policy changes. Provide all tenants with copies and/or make clear postings around the complex.
• Serve notices and warnings in writing. Verbal notices will not protect you if a situation deteriorates. Make certain to give your notices in writing and make yourself available for questions or discussion. Serving a notice and then disappearing from sight does not offer clear communication and can aggravate a situation!

Provide a Safe and Maintained Environment: Every landlord should offer tenants a living space that is up to code, safe for habitation and in working order. Even if you decide to contract out maintenance services, you should provide your tenants with repairs in a reasonable amount of time. Make good relationships with contractors that understand the nature of the work and are willing to come out after normal working hours. Save money for a rainy day so you can pay for emergency repairs when they arise. Maintaining the property will encourage tenants to take pride in their home and maintain their surroundings. Also, strive to make your tenants safe. You cannot control all conditions. However, changing locks, providing ample lighting for parking and having emergency procedures written and distributed are a few of the ways you can keep your tenants safe.

How do you advertise a rental property?

Advertising a rental property is important for getting units filled. Today you can use everything from word of mouth to online sites to advertise your property. In larger cities, you may even use "finding agencies" or real estate agents/brokers to advertise. When advertising your property, keep a clear list of amenities and useful services in the neighborhood. When composing your advertisement you must watch your wording as you cannot exclude any demographic. There are many federal laws/protections that regulate how you advertise your rental. The fair housing laws make it illegal "To make, print, or publish, or cause to be made, printed, or published any notice, statement, or advertisement, with respect to the sale or rental of a dwelling that indicates any preference, limitation, or discrimination based on race, color, religion, sex, handicap, familial status, or national origin, or an intention to make any such preference, limitation, or discrimination." (Source: U.S. Code Collection - Cornell University Law School). In addition to this clause, many states and cities may also prohibit discrimination based on marital status and sexual orientation. Most landlords have good intentions to rent to all qualified tenants. However, there are certain ways of wording advertisements which may be perceived as discriminatory. For this reason, you should carefully choose your wording when advertising your rental property. Avoid words and phrases such as: prefer, suitable for, ideal for, ethnic neighborhood [or other cultural identifiers]. For a good list, take a look at the Pennsylvanian Human Relations Commission's Reading Between the Lines: A guide for housing and commercial property advertisements as they include a list of terms to avoid. Another resource for examples is the Guidance Regarding Advertisements Under §804(c) of the Fair Housing Act by the US Department of Housing and Urban Development. Keep in mind this good rule of thumb: always describe property, never describe people.

What are some legal pitfalls to avoid?

There are a lot of legal concerns when renting out property. As we have seen, the law influences advertisements of rentals. In addition to this, you create a contract agreement with your tenants every time you rent. Therefore, it is important to have sound legal advice as a landlord. Establish a relationship with a lawyer who you may hire for any contract questions or possible representation. No one ever wants anything to get as far as a lawsuit. So here are some ways to avoid legal pitfalls in the first place:

• Always perform background checks with every possible tenant.
• Call tenant references.
• Treat every tenant the same in process; never cut a corner for one tenant because of a "gut feeling" or personal relationship.
• Keep all notices in writing. 
• Keep all due dates consistent from month to month and from tenant to tenant. 
• Always perform background checks on any staff.
• Make certain all staff are trained. They should know what they can and cannot do for tenants. If they are handling rental paperwork or advertising, they should know fair housing laws.
• If you contract out maintenance work, make certain they treat your tenants professionally. Although they don't work for you full time, they do represent you since you hired them.
• Keep housing up to code and safe for living.
• Investigate any complaints against your staff immediately.
• If a situation arises, consult a lawyer. Know how to legally proceed before taking any action.

How do you evict a tenant?

Evicting a tenant is one thing all landlords would rather avoid. However, sometimes circumstances deteriorate and eviction is the only feasible solution. If you have tried open communication but cannot get the tenant to pay rent or obey rules of the property it may be time to start the eviction process. The rules behind evicting a tenant vary from state to state. It is therefore imperative you discuss your options with a lawyer. Indeed, for the best security, you may want to do the whole eviction process through your lawyer. Regardless of the ups and downs involved with evicting a tenant, make certain to always maintain a professional decorum. Do not allow personal emotions to collide as this can only lead to further legal issues. Keep all of you requests in writing. The first step to any eviction is to send a written notice for them to pay back rent, fix problem behavior or move out. For example, in some states you may send a Demand for Rent or Notice to Quit form to a tenant who is behind rent payments. Or you may send a Notice to Cure Breach of Lease to inform the tenant that they must fix behavior that is contrary to your rental agreement. A Notice Regarding Termination of Lease may be used in some states when there is no chance for reconciliation. For example, the tenant is involved in illegal activity on the premises such as drug trafficking. If problems have not be rectified after notices have been given, then a suit is filed against the tenant. Upon winning this, it is law enforcement personnel who deliver written notice when the tenant may remove their items from the premises. You should never remove a tenant's items yourself. Using the police will ensure that you cannot be accused of taking or damaging any of the tenant's property. Essentially, make certain to obtain legal advice, serve warning notices required by your state, keep all notices and communication in writing and use local law enforcement to help keep you protected from any accusations of unfairness.

None of the above is a substitute for legal advice. An attorney should be consulted.

FREE Rental Agreement Forms

In cooperation with our partners at Lawchek® and Lawsonline™, Homecheck is pleased to provide a sample Rental Agreement Forms for FREE. This is not a substitute for legal advice. It is never recommended that an individual undertake his or her own representation in such matters as real estate law, even though most states do permit such activity. Any individual who is serious about proper real estate transactions would want to have capable legal assistance. An attorney must be consulted.

• Blank Rental Agreement Form Example Rental Agreement Form
• Blank Apartment Lease
• Blank Notice to Quit "

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Resourceful Links

Fair Housing by CivilRights.org
www.fairhousinglaw.org 
The Fair Housing National Multimedia Campaign is designed to increase public awareness of the Fair Housing Act and its protections, encourage the reporting of fair housing discrimination to the appropriate agencies, and provide information and resources to help communities and institutions support individuals and families who exercise their fair housing rights.

Landlord.com
www.landlord.com
In early 1998 the decision was made to spin Landlord.com off as a separate entity, dedicated to providing services to landlords and other real estate professionals on-line.

National Fair Housing Advocate Online
www.fairhousing.com
The National Fair Housing Advocate Online is a resource designed to serve both the fair housing advocacy community and the general public with timely news and information regarding the issues of housing discrimination. Find local organizations to help with any Fair Housing questions: http://www.fairhousing.com/index.cfm?method=agency.search

National Fair Housing Alliance
The National Fair Housing Alliance (NFHA) is the only national organization dedicated solely to ending discrimination in housing.

US Department of Housing - Home & Communities
www.hud.gov/offices/fheo/
The Office of Fair Housing and Equal Opportunity (FHEO) administers and enforces federal laws and establishes policies that make sure all Americans have equal access to the housing of their choice. We can help you with your housing discrimination problem. If you feel your rights have been violated, let us know.

US Department of Justice - Fair Housing Act
The Fair Housing Act, 42 U.S.C. 3601 et seq., prohibits discrimination by direct providers of housing, such as landlords and real estate companies as well as other entities, such as municipalities, banks or other lending institutions and homeowners insurance companies whose discriminatory practices make housing unavailable to persons because of: race or color, religion, sex, national origin, familial status, or disability.