Pg. 06 - Why is Rent Control So Bad? Pg. 14 - 10 Tips for Every Property Manager
Pg. 24 - The Importance of a Lease Agreement When Leasing a Property
Pg. 30 - The Importance of Reporting Payment History of Non-Paying Tenants
Publisher’s Message
A Message From Bob DeCosmo, President Of CTPOA
News And Views From The Capitol
Why is Rent Control So Bad?
Realtor Report
Realtors Gather to Discuss Lack of Housing In CT
Insurance Insights
How Often Should I Shop Around for Homeowners
Insurance?
Property Management Tips & Tricks
10 Tips for Every Property Manager
Advocate For Property Owner Rights
On June 7th at midnight the 2023 Legislative session ended in Connecticut but not before damage was done to rental property owners, cities, and towns.
On the last day of the session, the Senate called a bill, a “Frankenstein” of a Bill that was titled, AN ACT ADDRESSING HOUSING AFFORDABILITY FOR RESIDENTS IN THE STATE that cobbled together many unrelated concepts regarding housing.
For over 10 hours the Republicans in the Senate discussed the many failings of the Bill, offered many commonsense amendments that once offered, the Housing Committee Senate Chair, Marilyn Moore of Bridgeport immediately proclaimed the amendment should not pass and every commonsense amendment failed along party lines on a 24 to 12 vote.
The very debate showed the deep divide in how the parties operate and for the 3rd straight years, tenant issues prevailed at the expense of the property owners who have all the responsibilities of owning and maintaining properties and now will have fewer rights and more requirements to deal with.
On June 22nd at 1:00 PM, CTPOA will host a webinar explaining the numerous law changes that impact rental property owners so landlords can be aware of what the new rules are.
However, on this day, landlords were not the only ones to pay a price, many small towns in Connecticut will soon have their quiet and peaceful settings possibly
disrupted by what the Democrats call “Fair Share Housing.” The concept was passed in this Bill and is the first step of abolishing local zoning and having the heavy hand of the State government dictate what goes in in our cities and towns.
Affordable Housing has been a hot button issue for decades, nothing new to add to the conversation here. Academia proclaims itself to be an expert on the subject and does studies and surveys and determines what percentage of our income should be used to pay for housing. If you are over that number, you are living in unaffordable housing.
The problem is not everyone has the same lifestyle, values, or goals. Some people gamble, spend money on drugs and alcohol and live well beyond their means while others pinch pennies and save for the future. Housing is not a one size fits all model and yet this bill forces cities and towns to have a percentage of their housing stock declared affordable, if not zoning and ordinances be damned, we’ll let developers build affordable housing in your town regardless if you have the school systems and infrastructure to handle and increase in housing units you must comply with the affordability requirements that soon will be instituted in Connecticut in the near future.
Our Legislature has made a wrong turn, a horribly wrong turn and wants to dictate how things should be and when it comes to housing. Legislators who have never owned or operated rental units should not force their liberal values and goals on a system that needs less government interference and not more government interference.
Free markets work and government intervention only seems to make matters worse. Let’s not forget how the current affordability issue started. We closed our housing courts for 20 months, eliminated the supply of apartments from the market and had an increase in demand for rentals from an influx of New York residents fleeing here.
Providing housing is a business that the government has failed at repeatedly. The solution is to let private markets operate and find their natural balance.
Why is Rent Control So Bad?
By: CTPOARent control is a highly debated topic, and opinions on its effects can vary. While some argue that rent control can provide affordable housing options and protect tenants from skyrocketing rents, others believe that it has several negative consequences. Here are some reasons why rent control is often criticized:
1. Reduced Housing Supply: Rent control can discourage landlords from renting out their properties or investing in new housing developments. When rent prices are capped below market rates, landlords may find it financially unviable to maintain or upgrade their properties. This can lead to a decrease in the overall housing supply, exacerbating the shortage of affordable housing.
2. Inefficient Allocation of Housing: Rent control can lead to inefficient allocation of housing units. Due to the artificially low rents, tenants may have little incentive to vacate their
current apartments, even if their housing needs change. This can result in underutilized or misallocated housing units, with some tenants occupying larger spaces than necessary while others struggle to find suitable accommodation.
3. Maintenance and Quality Issues: Rent control can discourage landlords from investing in property maintenance and improvements. With rent prices kept low, landlords may not have sufficient funds to cover the costs of repairs and renovations. Over time, this can lead to a deterioration in the quality of rental housing, negatively impacting tenants' living conditions.
4. Black Market and Illegal Practices: In some cases, rent control policies can create incentives for illegal practices, such as subletting at higher prices or under-the-table payments. These practices can undermine the intended goals of rent control and further complicate the housing market.
5. Negative Impact on Investment and Development: Rent control policies can discourage real estate investment and development. Investors may be reluctant to invest in areas with rent control regulations, as it can limit their ability to generate reasonable returns on their investments. This reduced investment can hinder the growth and revitalization of neighborhoods and cities.
6. Disincentive for New Construction: Rent control can discourage developers from constructing new rental units. If developers anticipate that they will not be able to charge market rents due to rent control policies, they may opt for alternative ventures that offer better financial prospects. This can further exacerbate housing shortages and limit the availability of new housing units.
Wondering what areas already have rent control in place? The following states have some form of rent control or rent stabilization measures in place:
1. California: California has several cities with rent control ordinances, including San Francisco, Los Angeles, Oakland, Berkeley, and Santa Monica. These cities have implemented rent control to varying degrees.
2. New York: New York has rent stabilization laws that cover certain types of rental properties in New York City, as well as rent control regulations in some municipalities outside of the city, such as Albany, Buffalo, and several other smaller cities.
3. New Jersey: New Jersey has rent control
ordinances in place in various municipalities, including Jersey City, Newark, and Union City.
4. Maryland: The state of Maryland allows local jurisdictions to implement rent control if they choose to do so. Montgomery County has enacted rent control measures.
5. Oregon: In 2019, Oregon passed a statewide rent control law that limits rent increases and provides eviction protections for tenants.
6. Washington, D.C.: The District of Columbia has rent control laws that cover most rental units in the city. The laws include restrictions on rent increases and eviction protections.
It's important to note that rent control policies can vary significantly within these states, and the specifics of each policy can differ. Additionally, rent control policies can change over time as new laws are enacted or existing ones are modified.
States with rent control, such as California, New York, New Jersey, Maryland, Oregon, and Washington, D.C., face common downsides. These include reduced housing supply, deterioration of rental units, inefficient allocation of housing, limited investment and development, higher rents for non-controlled units, and administrative challenges. The specific impacts can vary, but these concerns highlight the potential drawbacks of rent control policies in these states.
Do some research and stay informed. As a landlord, property manager or REALTOR, rent control can have very bad consequences.
Realtors Gather to Discuss Lack of Housing In CT
By: Susan Raff, with wfsb.comRealtors from across the state gathered in Hartford last month to address challenges, the biggest being a lack of housing. The event was hosted by the Connecticut Association of Realtors.
The lack of available housing is making this a tough market. Even with higher interest rates homes are selling fast and buyers are getting what they want and more.
Connecticut also has more people looking for homes. In 2020 during the pandemic, 55,000 people moved to Connecticut.
Governor Ned Lamont was the guest speaker at the event. He said housing is a priority.
“We have a shortage of homes now but remember five or 10 years ago we had too few people looking at too many homes they were sitting on the market for a long time. Now we got to building housing,” Lamont said.
Lamont and legislators are looking at more incentives for cities and towns to build more housing and tax breaks for homeowners.
Eyewitness News spoke to Kyle and Faith Hayes back in February. They had just found a home, but it had taken months of searching.
“It’s a sellers’ market, so what we could have afforded previously, we couldn’t afford going in and also the inventory was very low,” said Kyle Hayes.
They were able to take advantage of a new program for first time homebuyers, which allows them to have their loans forgiven 10-percent every year they are in the home up to 10 years. But this doesn’t address the underlying problem which is a lack of housing.
“Currently we have roughly 3,100 single family and condominium listings in the entire state of Connecticut to put that in perspective pre-pandemic there were 22,000,” said David Gallitto, President of CT Realtors.
“I am trying to do something where some of the older folks want to downsize but stay in Connecticut,” Lamont said.
Lamont is referring to giving homeowners a break in the capital gains tax. He also wants to give cities and towns more incentives to build more housing.
“
Come up with your plan I want this to be your plan but if you don’t come up with a plan there are ways developers can move things along,” Lamont said.
Some cities and towns have been reluctant when it comes to building apartments and condominiums, however there is currently a housing boom in New London, mainly because of Electric Boat adding more jobs and construction of a wind power facility. But there’s no question, the rest of the state needs more housing.
How Often Should I Shop Around for Homeowners Insurance?
By: Ben Luthi, with Experian.comHomeowners insurance is an important policy to have in place because it can give you financial recourse if your home or property is damaged, stolen or destroyed. Many homeowners decide on a policy, factor it into their monthly budget and forget about it. But even if you shopped around to get the best deal when you first purchased your house, it doesn't mean your company still offers the best price. Here's why you should re-shop your policy every year or two.
Factors That Determine Homeowners InsuranceRates
Homeowners insurance carriers consider several different factors when calculating your policy premium, and it's possible for some of these factors to change over time. What's more, insurers may reevaluate how they view them when determining rates.
While factors can vary from insurer to insurer, here are some of the more common considerations that go into your policy premium calculation:
• Location
• Replacement cost of the home
• Deductible
• The home's age and condition
• Security and safety features
• Claims history
• Your credit history (in states where it's allowed)
• Condition of the roof
• Home renovations and remodeling projects
• The presence of a swimming pool or
trampoline
How Often Can You Re-Shop Homeowners Insurance?
There's no set amount of time that you have to hold on to your original homeowners insurance policy. You can even cancel it in the middle of the year if you've found something better, although some carriers may charge a small fee for early cancellation.
In particular, though, you may want to consider re-shopping your homeowners insurance policy every year or two, particularly if your premium increases. If you pay your home insurance as part of your mortgage, your mortgage payment could also rise because of premium increases.
That said, your mortgage payment may include your principal and interest payment, homeowners insurance and property taxes, so you'll want to dig into your payment to find out which component caused the increase.
Even if your insurance premium hasn't gone up, it may make sense to re-shop your coverage if your insurance company doesn't plan to renew your policy, the company is making changes to your coverage or you don't have enough coverage based on the value of the home.
How to Shop for Homeowners Insurance
When shopping around for homeowners insurance, it's important to cast a wide net.
The more companies you can compare, the better, and that includes both large and small carriers.
Of course, this can be extremely timeconsuming if you're submitting an application with each individual company. A good way to save time is to work with an insurance broker or an independent agent who works with multiple insurers.
Before you pick a broker or an agent, ask about how they're compensated. Some may receive better commissions from certain carriers and may recommend their policies, even if they're not the best fit for you.
You can also use online brokers that don't offer a personal touch but can provide you with quotes based on your situation and information.
There's no particular time of year in which it's best to re-shop homeowners insurance, so do it when it works best with your schedule.
Steps to Lower Your Homeowners Insurance Rates
In addition to re-shopping your policy, there are several things you can do to improve your chances of securing a lower rate:
• Improve your credit. According to the National Association of Insurance Commissioners, 85% of homeowners insurance carriers use credit-based insurance scores in states where it's
legally allowed. You can get your free credit score and credit report from Experian to see where your credit stands and take steps to improve your credit score to potentially help lower your premium.
• Raise your deductible. Your deductible is the amount that you have to pay out of pocket in the event of an insurance claim. A lower deductible means less out-of-pocket expenses in that scenario, but it also means a higher premium. If you can afford a higher deductible than the one you have, consider increasing it to see how much you can save on your rate.
• Bundle your policies. If you haven't already, consider getting your homeowners insurance through the same carrier that maintains your auto insurance policy. Most insurers offer discounts to those who bundle different types of policies together.
• Improve safety and security. Speak with an insurance agent about steps you can take to
improve the safety and security of your home. That may include things like installing a home security system, installing storm shutters, reinforcing your roof, modernizing your heating, plumbing and electrical systems and more.
Note that some of these steps may not be an option for everyone. Take the time to consider which ones may work for you and the potential costs associated with them to decide how to proceed.
Maintain Good Credit for Better Long-Term Insurance Rates
Improving your credit can make it easier to qualify for better insurance rates, but it's important to avoid being complacent once you've achieved your goal. Over time, insurers may recheck your credit at renewal and adjust your premiums accordingly.
Additionally, if you decide to move, your new homeowners insurance rate could depend partly on your credit score.
10 Tips for Every Property Manager
By: CTPOAManaging properties efficiently requires a combination of organization, communication, and attention to detail. Here are some tips and tricks for property management:
1. Establish Clear Communication Channels: Maintain open lines of communication with tenants, contractors, and other stakeholders. Respond promptly to inquiries and address concerns in a timely manner. Consider using digital tools like property management software or dedicated communication platforms to streamline communication.
2. Screen Tenants Thoroughly: Conduct thorough tenant screenings, including background and credit checks, to ensure you select reliable and responsible tenants.
This can help reduce the risk of late payments, property damage, or other issues. We recommend using the most accurate provider in the state, TenantTracks
3. Create Comprehensive Lease Agreements: Use detailed and comprehensive lease agreements that cover important terms and conditions. Clearly outline rent amounts, due dates, maintenance responsibilities, and any specific rules or regulations. This helps avoid misunderstandings and disputes.
4. Regular Property Inspections: Conduct regular inspections of the property to identify any maintenance issues or potential problems. Promptly address any necessary repairs or maintenance to
prevent further damage.
5. Implement Efficient Maintenance Systems: Develop a system for handling maintenance requests promptly and efficiently. Maintain a list of reliable contractors or handymen who can quickly address repair issues. Consider implementing an online portal or app where tenants can easily submit
6. Stay Updated with Legal Regulations: Stay informed about local, state, and federal laws and regulations pertaining to property management. This includes tenant rights, fair housing laws, eviction procedures, and safety regulations. Compliance with these laws helps protect your interests and maintain positive tenant relations. CTPOA regularly updates members on important legislative activity. If you’re not already a member, become one today HERE.
7. Prioritize Tenant Retention: Happy and satisfied tenants are more likely to renew their leases, reducing turnover costs. Be responsive to their needs, address concerns promptly, and consider periodic rent reviews to ensure fair market value. Offer incentives for long-term leases, such as rent discounts or small upgrades.
8. Maintain Financial Records: Keep accurate and up-to-date financial records for each property. This includes rent payments, expenses, maintenance costs, and any other relevant financial information. Use accounting software or hire a professional accountant to assist with bookkeeping and tax obligations.
9. Consider Property Management Software: Utilize property management software to streamline various tasks such as rent collection, lease management, maintenance requests, and financial tracking. These tools can improve efficiency and help you stay organized.
10.Continuously Educate Yourself: Stay updated on the latest trends and best practices in property management. Attend industry conferences, join local associations, or take online courses to expand your knowledge and skills. Remember, property management requires a proactive and hands-on approach. By implementing these tips and tricks, you can enhance your property management capabilities and provide a positive experience for both tenants and property owners.
5 Tips for Buying a Home With Mortgage Rates at 20-Year Highs
By: Ellen Chang, with finance.yahoo.comBuying a home as mortgage rates continue to increase has become more challenging.
Some potential buyers have retreated to the sidelines and are taking a break until mortgage rates start declining again or for home prices to fall to a level they can afford.
Home prices have not declined year-overyear because the number of listings have fallen as potential sellers concerned by high mortgage rates decide to stay in place. Even as the sales of homes declined by over 30% from a year ago, new listings are down nearly 20% because many prospective sellers balk at giving up a 2% or 3% mortgage rate.
Pending home sales declined by 35% year over year during the four weeks ending October 23, according to a report from
Redfin. The dip is the largest annual decline and the fewest homes under contract in any October since at least 2015 when Redfin began its weekly housing market records.
"Until this month, the pullback in the housing market could be described as something of a return to pre-pandemic conditions before sub-3% mortgage rates ignited a home buying frenzy in 2020 and 2021,” said Taylor Marr, deputy chief economist for Redfin, a real estate company. “But now both mortgage purchase applications and pending sales are below 2018 levels. A fouryear setback is a serious correction. With mortgage rates still elevated, we are in for further sales declines, but those should eventually bring price relief to those who need to move this winter.”
Some potential homeowners either can not wait or need to move now. Here are five tips for buying a home as mortgage rates exceed 7%.
Look For Homes on the Market Longer
Consider looking at homes that have been on the market for 30 or 60 days and making a lower offer, Marr said.
“Not everything is dictated by asking prices, buyers should account for the fact that home values are likely about to decline when determining their offer price,” he said.
One strategy is to offer $475,000 on a $500,000 listing, Marr said. If you like a home and can comfortably afford paying $475,000 for it and believe home prices will decline by 5% in the next year, you can factor that into your negotiations.
“When prices were soaring at the height of the pandemic and expected to grow 10% year over year, buyers often priced that into offering over asking price, and it also works the other way around,” he said.
Some sellers are also willing to help buy down your mortgage rate, which would mitigate some of the impact of higher rates.
"Every set of market conditions comes with its own tradeoffs," said Sacramento real estate agent Michael Cendejas. "Today
many homes are staying on the market for a month or two. While mortgage rates are much higher now, buyers have the opportunity to negotiate. We've gotten sellers to agree to a lower price and to provide a credit, which enables the buyer to buy down their mortgage rate to below 6%."
Pay Discount Points
Some mortgage lenders offer discount points which are fees you pay now in order to lower your interest rate.
When you pay for points, you receive a lower interest rate and pay less over time, according to the Consumer Financial Protection Bureau.
“Points can be a good choice for someone who knows they will keep the loan for a long time,” said the federal consumer protection agency.
The points are calculated in relation to the loan amount - each point equals one percent of the loan amount.
“
As in other times of higher rates, mortgage companies are getting creative with the products they offer,” said Bill Golden, a real estate agent and associate broker with Keller Williams Realty Intown Atlanta. “You can often pay some discount points upfront to buy the rate down.”
There are products out there like the 3-2 -1 buydown loan where the homeowner pays a buydown fee at closing and your rate is 3% less for the first year, 2% less for the second year, 1% less for the third year, and then remains at the full rate for the rest of the life of the loan, he said.
Refinance Your Mortgage Later
Most people will refinance their mortgage within the first three years during this current environment, Golden said.
Refinancing does mean starting over on a mortgage and resetting the clock on the payoff date and paying closing costs again, but a lower rate means more of your payments will go towards the principal amount.
“We have a saying in the real estate business - you marry the house, but date the rate,” he said. “We all know that rates fluctuate over the years,so buy the house you want and just know you can always refinance when rates come back down, which they will.”
Mortgages With Lower Down Payments
There are several types of governmentbacked mortgages that require low or no down payment.
Instead of paying 20% for a down payment for a traditional 30-year mortgage, a FHA loan is backed by the Federal Housing Administration and lets you only provide a down payment as low as 3.5% since the intent was to encourage first-time homebuyers.
Mortgages backed by the Veterans Administration, known as VA loans, don't require any down payment. They're only available to veterans or active-duty military who meet a minimum service requirement.
For people buying homes in rural areas, there's also the option of a zerodown mortgage backed by the U.S. Department of Agriculture. The USDA defines "rural" as "any town, village, city, or place" with fewer than 20,000 people that is not located within a Metropolitan Statistical Area.
These government-backed mortgages typically carry lower interest rates than so-called conforming mortgages, meaning home loans that meet the standards to be purchased by Fannie Mae and Freddie Mac.
The average U.S. fixed rate on Tuesday for a 30-year conforming mortgage was 7.05%, according to Optimal Blue. That same day, the average rate for a mortgage backed by the FHA was 6.86%, while a VA loan was 6.73% and USDA was 6.92%.
Adjustable Rate Mortgages
There are several types of adjustablerate mortgages, or ARMs, that carry lower rates.
Typically, the rates for ARMs are fixed for five, seven or 10 years, meaning the mortgage rate only resets – with caps on the interest rate change –after that time period. They can be a good option when mortgage rates are high.
8 Ways to Save Money on Your AC Bill This Year
By: Tom Scalisi, Samantha Allen with forbes.comIt doesn’t matter how cool they keep their home, just about everyone gets hot under the collar when the air conditioning bill rolls in. But don’t fear. Even as the postal service drops that dreaded envelope through the mail slot, there are some ways to save money on your AC this year, and the following tips should help.
1. Raise the Temperature
Obviously, raising the temperature a bit is a surefire way to save some on an AC bill. Estimates vary, but some experts believe that raising AC’s temperature two to three degrees can save the homeowner as much as two to three percent on their energy bill.
The reason raising the temperature saves money is simple: when the thermostat’s setting is higher, the unit itself doesn’t have to work as hard to keep the air inside the home close to that setting, resulting in less energy usage.
2. Close the Curtains
The summer sun is not your AC’s friend. For that reason, it’s important to draw the curtains during the hottest hours of the day.
From late morning to mid-afternoon, the sun will beat on south-facing windows, causing the home to heat up through a process called Solar Heat Gain. The solar heat gain will warm objects within
the room, which will then radiate heat into the space. These higher temperatures force the AC to work harder to keep it cool, driving up the energy bill. Drawing the curtains will help.
3.
Locate and Seal All Drafts
Drafty windows and doors don’t just affect a home in the winter. If the AC is running full blast but there are gaps where treated air can escape, cold air will escape and warm air will sneak in, and subsequently, the temperature in the home will begin to rise.
In this case, the air conditioner will have to run more often to maintain the thermostat’s setting. So, caulk gaps around windows and use weather stripping around doors. Trapping that cool air inside while keeping the cold air out can make a big difference in the energy bill.
4. Open the Windows at Night
Once the sun sets and the air begins to cool, it may be worth shutting the AC off for the evening and opening the windows. As the cool air enters the home overnight, it will displace the
warmer air by pushing it upward. So, open the windows on the first and second floor and allow the air to flow through the entire home to keep it cool. Just be sure to shut them as the temperature rises.
Some folks install whole-house or attic fans for this reason. They install the fans in an attic or similar space and set it to suck the air out of the house, projecting it up and out of the home. This draws cool fresh air in, effectively cooling the space at night.
5. Install a Smart Thermostat
One of the greatest improvements in modern home technology is a smart thermostat. These models have programmable settings that the homeowner can leverage throughout the day. For instance, if everyone works or heads to school during the day, there’s no reason the thermostat
should be at 65 degrees. But, they can reset to a lower temperature when everyone heads home. With a smart thermostat, users can change the temperature inside the house from their phones, or adjust the schedule to fit the family’s needs. Used correctly, this can yield big savings on your utility bill.
6. Move the Thermostat
There are certain spaces within a home where a thermostat just doesn’t belong. For instance, if a thermostat is in front of a southfacing window and the sun pours
through the glass directly onto it, it’s going to think the home is warmer than it actually is. This will cause the AC to run too often, making the rest of the home excessively cold and driving up the utility bill.
There are better places to install a thermostat. Try a central hallway within the home or in another living space away from those south-facing windows. Moving a thermostat can be a bit of a pain, but the results might very well be worth it.
7. Avoid Cooking Inside
During the months in which the home relies on air conditioning to stay comfortable, avoid cooking inside. Baking brownies in the oven can warm the entire home, and the humidity from a big pasta pot of boiling water can make things feel sticky. In these cases, the Thermostat will think it’s warmer
than it is and the air conditioner will run more often than it is supposed to.
Luckily, summer is full of outdoor cooking opportunities to keep the home cool. Cooking on the grill, using an outdoor pizza oven and even kicking back with S’mores around a firepit can help keep the home a bit cooler.
8. Get Your AC Serviced
There are a lot of reasons why a
neglected air conditioning system could be driving the utility bill up. For instance, clogged coils will not allow the machine to work efficiently. Low refrigerant can cause the coil to freeze. Dirty filters can reduce airflow. The reasons continue.
Folks that really want to save money on their AC bill this summer should have their air conditioner serviced by an expert. The air conditioning pro will make sure the system is running as efficiently as possible, helping the homeowner save some cash off of each utility bill.
By: Paul Jenney, Compliance Officer with TenantTracks
