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As a landlord, one of the things you need to figure out is how much to charge your tenants for rent. You want to make sure you are getting the most out of your investment and generating positive cash flow, but you can’t charge so much that potential renters pass on your unit for cheaper options. Charging too low for rent not only means missing out on revenue, but it might also attract lower-quality tenants. There are a few different considerations to be made when calculating how much to charge for rent. As a property and tenant management company in Utah, here is our guide for Utah landlords. Based on Property's Value One method for calculating how much rent to charge is to base it off of your property’s value. A common rule of thumb in the industry is to settle on a monthly rental charge that is around 1% of the property’s market value. However, the rent amount for a higher-valued property probably needs to be less than 1% in order to attract enough tenants. It’s not uncommon to have good revenue-producing properties charging a monthly rate that is 0.5-.75% of the current market value. In a normal and stable Utah market, you’ll find that many rental properties charge rent near this range, give or take a bit, but there is no definitive “rule”.
As a rental property investor, choosing the right investment property is crucial to ensure your success. There are various types of investment properties available in the market, each with their own level of risk. It is important to understand these risks to make informed decisions about where to invest your money. Below, we rank different investment property types by their risk level and provide insights into each of them. Understanding Investment Property Risk It is essential to understand the concept of investment property risk itself and the types of risk. Investment property risk refers to the likelihood of losing your investment or not getting the expected returns due to various factors such as economic conditions, property location, and tenant quality. The risk level of an investment property is dependent on its type, location, current state of the economy, market demand, and more. In general, the higher the potential returns of an investment, the higher its risk level. However, there is no guarantee that higher risk will always lead to higher returns.
The “2-out-of-5-years rule” is a rule related to the criteria that must be met in order for a property investor to avoid or reduce capital gains ... Avoiding Capital Gains Tax To understand the 2-out-of-5-years rule, you need to understand the desire for property owners to avoid or reduce taxes owed when they sell a property. To avoid paying more than they have to in taxes, many property investors take advantage of opportunities such as the 1031 exchange process or “home sale exclusion” tax breaks. The 2-out-of-5-years rule is one of the criteria that must be met in order to qualify for the home sale exclusion.
For anyone renting to tenants in Utah, it’s important to be aware of current laws regarding emotional support and service animals. This is a Utah landlord’s guide to animal laws to help you decide on your policies. Definition of an Emotional Support Animal in Utah Emotional support animals, often dogs or cats, help people with mental illnesses such as depression or anxiety by providing comfort or support. Emotional support animals (ESAs) are not trained to do special tasks like service animals. ESAs are not permitted to be in public places where pets are prohibited. The designation of an animal as an ESA is not something a renter can claim for themselves independently. Official ESAs must be prescribed and designated as such by a licensed mental health professional (see “ESA Letter” below ). Emotional Support Animal (ESA) Letter For a pet to be considered an emotional support animal under Utah law, the handler must have an official ESA Letter from a licensed mental health professional. Mental health professionals have screening measures to help determine if an individual qualifies for an emotional support animal. ESA’s have less rights than service animals, and are not covered under the American Disability Act. Definition of a Service Animal in Utah Service animals are animals that are trained or are being trained to provide some sort of service or carry out specific tasks for a person with a disability. Service animals must be permitted public accommodation with their handler. Although some animals such as miniature horses can sometimes be used as service animals in some states, only dogs may qualify as service animals under Utah disability rights law. Service dogs in Utah may be trained for tasks such as helping the deaf, blind or visually impaired, or seizure prone. There are also dogs that are specially trained to alert their handlers about the presence of dangerous allergens or to help with psychiatric services such as preventing self-harm, reminding handlers to take medication, or providing calming measures during psychological distress. Service animals are protected under the American Disability Act.
Charging Late Fees: Utah Property Owner's Guide Most landlords include some sort of late fee policy in their lease agreements in order to help ensure that tenants pay rent on time and in full. But each state has their own laws and regulations about late fees and how they can be utilized. This is the complete guide to late fees for real estate investors owning property in Utah. When Can Landlords Charge Late Fees in Utah? The state of Utah allows landlords to charge late fees when rent is not paid on time, according to the agreed upon terms of the lease. Is there a legal requirement for late fees in Utah? Landlords in Utah may not charge late fees that are more than 10% of the agreed upon rent amount, or greater than $75. The late fee policy must be outlined in the agreed upon lease terms in order to be legally enforceable, unless the rental agreement is month-to-month, in which case a 15-day notice of the charge is required. Does Utah law require a grace period? No, there is no grace period required in Utah. This means that landlords may choose to charge a late fee as soon as rent is past-due. However, a grace period may be outlined in the lease terms if the landlord chooses to do so. Why You Might Consider a Grace Period Grace periods allow for normal occurrences such as money being delayed in transit, tenants receiving their paycheck on the same day rent is due, due dates falling on a holiday or weekend, or rare occurrences when a tenant has to pay a day or two late. While tenants should not expect to be able to always pay within the grace period, having one in place accounts for occasional things that don’t need to be addressed with official notices or burdensome late fees. What about weekends and holidays? Utah landlords should make it clear in their lease agreement what is expected when the rent due date falls on a weekend or holiday. As a general rule, most landlords allow rent to be paid the next business day following the weekend or holiday without being considered late. We recommend this as a best practice. However, Utah landlords are not required by law to adhere to this standard. What about partial rent payments? The decision on whether or not to accept partial rent payments at all is somewhat debated in the property management industry. At Joseph Thomas, we believe there can be instances where it makes sense to accept partial payments. If you choose to accept them, a partial payment is still not a full rent payment, so the tenant can still be subject to late fee charges. If left unpaid, eviction may still be a legal consequence. Your chosen policy regarding partial payments should be outlined in the lease agreement. *Note: partial rent payments as described here are different from prorated rent payments, which are agreed upon by both landlord and tenant, and would not incur late fees. How Much Can Landlords Charge for Late Rent in Utah? As of May 2021 , Utah landlords cannot charge a late fee that is more than 10% of the agreed upon rent or greater than $75. At Joseph Thomas, our recommendation is to set late fee amounts in consideration of your local market, the type of renter and lease agreement you are after, and how willing you are to potentially go through the process of evicting a tenant that cannot pay rent in full, plus fees.
