Personal Guarantee Of Rent And Performance Of Lease Conditions: Fill & Download for Free

Twelve Financial Concerns Which Keep Small Business Owners Awake at NightTop Line Revenues. Most small businesses have a fixed cost for being in business as well as a reasonable margin. They need a certain amount sales to cover the fixed costs, and even more to gain some financial prosperity.Greater Margins. For those business owners who are margin-challenged … issues surrounding productivity, utilization of assets and people, and the prices the owners can charge all play into the margin problem. I am familiar with an industry where there are both franchises and independents. The well-run independent has 10% of sales or more advantage over the franchise. Often, but not always, in this particular industry the franchise does not provide enough off-setting value to bridge that gap.Variable Costs. Also known as cost of good sold. Wages. Benefits. Materials. Commissions. Payments for intellectual property.Credit lines. Can I create working capital by asking my suppliers to extend credit to me? What are the terms and conditions? Do I have to give a personal guarantee?Prices. When can you raise a price? How should I quote? What if I miss something in my estimates?Wages. How can I retain people and not bust my cost structure?Marketing. Can I grow if I give a discount? A free trial?Fixed Costs. Rent. Licenses and permits. Certain administrative expenses such as payroll processing, bookkeeping or accounting, websites, or business insurance(s).Hard-to-measure Costs. Employee turnover. Lost customers. Bad morale on the staff. A disruptive employee. People who don’t perform up to expectations. Training. Executive time; all business leaders have bandwidth issues.Unforeseen, and not budgeted events. This may be the single most devastating financial concern. Lawsuits, which can easily cost $250K or more. A lease which expires and the landlord doesn’t renew; and therefore a move of the business. An unexpected resignation of a key team member. A union organizing campaign. A fine from an agency; or worse yet, a suspension of business. A calamity such as a fire. An embezzler; this happens more than you think it does. A big customer who does not pay, or pays late. A customer who owes you money and goes out of business.Cash flow planning. This is an issue in almost every small business. See #9 above. If the actual revenues from customers were precisely predictable, it might be easy. But … the behavior of customers is not predictable. Maybe the best you can do is use a statistical approach to uncertainty. Or deal with it using a bank line of credit, factoring receivables, or a hard money lender. All of these bring new issues.The last day of business. There could be multiple concerns, How do I declare bankruptcy? Can I just close down? Can I sell the business? What is it worth? How do I structure a deal; for a family member, or an employee, or an outsider, or a competitor?

While it sounds as if you acted reasonably, nothing is ever completely certain. So let me play devil’s advocate here.First, let’s begin with a summary of Oregon law, as presented by the Oregon Community Alliance of Tenants. (That doesn’t mean it’s guaranteed to be accurate, though.):Getting Your Deposit BackLandlords must provide the applicant with a written list of all deposits, fees, and rent that are charged before landlord enters into new written rental agreement with an applicant or accepts any payment from an applicant. A landlord must supply a receipt for any security deposit paid by the tenant ORS 90.300(2).Under Oregon State Law, Landlords are required to either return deposits or provide a written explanation as to how all or part of the deposit is being used within 31 days after a tenant has turned in the keys (ORS 90.300(10)).∞ Deposits may be used to pay all unpaid rent and fees, and damages caused by tenant that are beyond normal wear and tear.∞ You are responsible for thoroughly cleaning your home before moving out. Try to leave your home in as good (or better) condition as when you moved in.∞ Check your rental contract. Sometimes there are rules listed in it about how landlords deduct cleaning costs from the deposit.∞ Make sure you have given the appropriate written notice to move out (usually at least 30 days) and have turned in your keys!∞ Also, make sure the landlord has a forwarding address for you.∞ If you haven’t moved out yet, you should walk through the apartment with the landlord to discuss its condition. During the “walk through” you can ask a friend or family member who doesn’t live with you to acompany you as a witness. Fill out a Unit Condition Report Form which both you and the landlord should sign. This sheet describes the condition of the entire apartment. Make and keep a copy! At the end of the “walk through” ask your landlord for an estimate of the deposit he or she will return to you.It appears that you did a lot of things correctly. You:Returned the balance of the deposit within 30 days.Provided a detailed explanation of deductions.Appear not to be required to do a move-out walk-though with the tenants.But let me get really, really picky.Did you: “provide the applicant with a written list of all deposits, fees, and rent that are charged before landlord enters into new written rental agreement with an applicant or accepts any payment from an applicant”? You say that the cleaning fee labor rate was listed in the lease. That’s good, but you were required to provide that and other charges to the applicant before the lease is signed. Did you? Uh oh.Did you provide the tenant a receipt for the security deposit?Did you give your tenant an EPA-approved pamphlet on lead paint? (That’s required by law.) Also, did you disclose any known lead paint issues? See The Lead Disclosure Rule - HUDWho performed the cleaning at $30 an hour? It may or may not be a problem if you did it yourself. For example, from a tax standpoint (I’m not an accountant, so this isn’t tax advice), if you yourself perform a service at a rental property, you can’t charge for your own time. However, if you hire someone to do the work, the amount paid to that person is deductible. I have no idea how Oregon views the question of charges to a tenant based on work you did yourself . . . if you were the one who did the cleaning.Was the person a tenant or a lodger? It’s possible—in fact, there’s a decent chance—that because you were renting out a room in your house, that person was legally a lodger, not a tenant. Here’s a discussion of the difference: What Is The Difference Between a Tenant and a Lodger? The good news is that it seems like it’s simpler to get rid of a lodger. The bad news is: There may be other requirements that you didn’t follow, acting on the assumption that the person was a tenant when in fact he was a lodger. These include requirements involving the lodger as well as requirement regarding licensing and operation.Those are just a few issues that might come up. Honestly, I doubt that they will. But you never know . . . and you should be prepared just in case they do. And there are some steps you can take—possible areas of past deficiencies on your part—to better protect yourself in the future.Oh, and don’t forget to check with your homeowners’ insurance company to determine if your policy might be voided if a tenant or lodger is involved in a claim against your policy.And just to emphasize: I’m not a lawyer or an accountant. Also, I’m licensed only in Virginia, not in Oregon. So none of this should be considered legal or tax advice. But, considering the issues I’ve raised, you may want to talk to a lawyer.

Sure, folks who are retired might not have a source of income, but their retirement savings and investments are so substantial, that they are able to draw a small percentage from their nest egg to provide for all of their expenses.It is all a matter of degree…A landlord wants to discern if a prospective tenant is the right fit that can consistently meet the terms of the rental agreement. No differently than a bank or mortgage company.The 3 “C’s”:CapacityCreditCollateralIn many cases, 2 out of 3 is enough. But it depends on what you define as “savings” and “excellent credit”.Let’s suppose someone was not retired, and had $5,000.00 in-savings and a FICO score of 680.To make for easy numbers, rent was $1,000.00 per month, including utilities. The Applicant did not want to disclosure income.As a landlord, I cannot make any assumptions. That $5,000.00 that the applicant has in savings is soft collateral, which means that while a tenant might have those resources available, they are not guaranteed and a landlord has no legal right, per se, to force payment from this bucket of money.If the applicant was approved for a six-month lease, if the tenant did not work, then the best that I can hope for is that I might get rent for 5 out of those 6 months.A FICO score certainly carries weight, but speaks past-tense and does not guarantee future performance.Capacity, via employment, especially many years of permanent, W-2 full-time employment with a reputable company, speaks well regarding resources and while not a guarantee of future performance, nonetheless it is the primary vehicle to deliver rent each month.Can a landlord reasonably expect for a tenant to deplete their life savings to pay rent? A few might, but many will not.What differentiates this example compared to a retired person, is the presence of an ongoing plan.If a non-retired person wanted to rent from me, and had less than $500,000.00 in savings and a FICO score of less than 720, and wanted to rent from me, there would be a long pause from me and I would have to think about it.Unless a person lives like a miser, $500,000.00 is an insufficient nest egg. Drawing 4% per year would only bring in $20,000.00 per year income. If they were not also drawing in social security, then this would not even pay rent, let alone any living expenses.However, if that same person was terminally-ill, and only had 5 years left to live, and had no concern about deleting their nest egg, then their financial picture would be much different, and the would bring in just over $100,000 per year in income, as the the half-mil would be still compounding interest in the meantime.Once an applicant has at least a 720 FICO score, then I might start to consider non-traditional situations.Otherwise, I am looking at DTI front-end and DTI-back-end ratios (Debt to Income) and taking each applicant’s situation and applying the same to what I would surmise their financial picture to look like, and if the same presents any barriers to them paying rent in a timely manner.Everyone starts out with excellent credit, because they have not ruined it yet. I do not want to be everyone’s guinea pig or experiment with my rental business.If $5,000.00 in savings - or even nearly $500,000.00 in-savings is supposed to be some prize (Wow-wee, look at me, I can “save” money. Now reward me and give me a good grade for trying so hard).No, I am a landlord, not a teacher, and my property is not a classroom or a plea for parental approval.I am a result-oriented, scenario-based business person that takes facts and extrapolates probabilities, much like an insurance actuary and have my own private formula of if Applicant A, has a DTI of X, then what is the minimum number of years of employment that they must have if their FICO is Y. I have this all written-out and codified, so there is no guesswork or “oh, please, just give me a chance” sob-stories intended to coerce me into making an emotional decision in business matters.Here is my criteria, in which I rent a 450 square foot unit with a market value between 700 to 900 per month:Character: Must have a prior rental history or have owned a home in the past. Must have been at current address at least one year (unless mitigated from other criteria). Past and currently landlords must have a favorable opinion of prospective tenant. Must have favorable Colorado personal references Prospective tenant cannot still owe any outstanding amounts with your current or past landlords. Must be able to contact present landlord or any past landlord. Must show no evictions ever. Should state an understandable reason why moving Prospective renter must not make any statement/references to/requests for special accommodations/charitable treatment (i.e.,’ I just need someone to give me a chance’,’ I am new here’, etc.). - My home is not a private charity or homeless shelterCapacity: Must be W-2, full-time traditional employment with reputable Colorado employer and pass verification Must have been with Colorado employer for at least two years (unless good FICO score offsets) Must be able to contact employer to verify employment and income Must not have overwhelming credit card debt (if known or discoverable) Must have at least 75% of income to be fixed and not-commission. Must be able to pay first month’s rent plus a security deposit in cleared-funds. Must meet minimum 3x income to rent requirements:Minimum Income-to-Rent percentage:Monthly Rent Minimum Annual Income:$700.00 - $25,200.00 Only under special circumstances$750.00 - $27,000.00 Only under special circumstances$800.00 - $28,800.00 Likely-Minimum Market Range$850.00 - $30,600.00$900.00 - $32,400.00 Mid-point$950.00 - $34,200.00$1,000.00 - $36,000.00 Likely-Maximum Market RangeCredit Report: No bankruptcies ever No foreclosures ever No outstanding liens or judgments or sued to collect a past judgment Must give permission to pull credit reports Minimal to no recent late payments, slow-pays, skipped payments or delinquencies on your credit in the past seven years Must meet minimum FICO credit score requirements at least 620. Scores under 700 are subject to condition that prospective renter have established tenure with their current employer.Credit Score Minimal Time with Current Employer:300--499 2 nd percentile 2% pop. 87% delinqu500-549 7 th percentile 5% pop. 71% delinqu550-599 15 th percentile 8% pop. 51% deliqu600-649 27 th percentile 12% pop 31% deliquUnder 620 Unacceptable620-659 5 years or more of permanent W-2 employment required (Fair credit)650-699 42 nd percentile 15% pop 15% deliqu660-679 3 years or more of employment (Good credit)680-699 2 years or more of employment (Very Good credit)700-719 1 years or more of employment (Excellent credit)700-749 60 th percentile 18% pop 5% delinqu720-749 1 year or less of employment (Superior credit)Above 750 No employment requirements (Prime credit)750-799 87 th percentile 27% pop 2% deliqu800-850 100 th percentile 13% pop 1% deliquCollateral:Must be able to pay Security Deposit and first month’s rent paid in full only in cleared funds (cash, money-order, bank cashier’s check).Criminal Background Check:(Yes to any of these questions immediately disqualifies prospective renter) No felonies of any kind No misdemeanors related to financial improprieties or physical violence Name cannot appear on any sex offender registry / Megan’s Law Have never manufactured methamphetamine or distributed any controlled substance for profit No any active warrants APB (All-Points-Bulletins) out for your arrest or detainment Must agree to a CBI (Colorado Bureau of Investigations) inquiry show any report of any of the above No permanent civil protection order or restraining order against applicantSubjectives open to scrutiny: Tardiness/rescheduled appointment more than once Appearance/cleanliness Appearance/ cleanliness of car Personality, manners and respectfulness Personality that suggests combativeness, dominance, abusiveness, passive-aggressiveness or charitable entitlements Any awkwardness/amicableness between tenant and landlord Questioning need to gather information/perform background check Aggressive haggling over rent Any disagreement regarding need for cleared funds Any distrust about requiring personal information for background check or accusations that thisrental is really just a front for identity theft If you reject an applicant because of negative information on his credit report, an Adverse Action Letter is needed to comply with FCRA (Fair Credit Reporting Act) regulations.Mitigation strategies to manage risk: Increase the security deposit required (i.e., require first month’s rent, security deposit, and last month’s rent if unable to secure tenant that meets established rental criteria.First Impressions of Character:Shows up on-time or late to showing? Yes / NoIf so, how late? If on-time or early, then note favorability. If more than 20 minutes late, then reject applicant.Respectful and courteous? Yes / Somewhat / NoIf not, then reject applicant.Neat and clean appearance? Yes / Somewhat / NoSubjective to note favorability or unfavorably.Neat and clean car? Yes / Somewhat / NoSubjective to note favorability or unfavorably.Must complete written application.If not, then reject applicant.If a person who is not eligible to receive social security, who saving was $750,000.00 or more, then their annual income would be about $30,000.00, which is just enough to pay rent and cover living expenses, without depleting their nest egg.If they had a FICO score above 720, and gave me a security deposit of $10,000.00, then I would gladly rent to them. Maybe even with a security deposit of $5,000.00.They would need to pay me first months rent, plus another $5,000.00 that I would hold for them in my savings account, and they would have collateralised the rental agreement sufficiently.