The time is finally here. You’ve done the hard work of getting your investment property ready for tenants. The people looking at it are oohing and aahing at the upgrades you’ve made and they all seem friendly. When one of them wants to move in, you have a good feeling about them. In fact, you’re sure they’ll be a great tenant, and your instinct is to just do a handshake deal and tell them the place is theirs. You’re over the hard work, so what’s the harm? Quite a bit, actually. The reality is that you’re a landlord now. Whether you hire someone to manage your property or are doing it yourself, it’s up to you to take certain steps to ensure that you have a good working relationship with your tenants. Here are some things to keep in mind.
Remember it’s a business.
Your tenants are your clients, and you are relying on them for your property to cashflow. You can have a friendly relationship with them, just as long as you aren’t actually friends because that can complicate things. With any tenant, there is the possibility that you may need to have a difficult conversation at some point. Becoming close to your tenants will make you uncomfortable having those discussions.
Be clear with tenants on your policies and procedures.
Who takes care of the landscape? Can they have pets? Do you care if they smoke in the unit? How many parking spots can they have? Who handles water, sewer, and trash? These are all policies and procedures that need to be addressed within the lease.
If you put it in your lease agreement, be ready to enforce it.
The lease agreement is a contract you are both bound to, and you have to enforce the contract. If you don’t, you’re creating the expectation that you won’t enforce it again in the future. Also, if you ever wind up in court, your tenant could cite your failure to enforce the lease as a defense. For example: Even though you were trying to be nice by not charging the late fee, the tenant can then argue that you set a precedent because you waived it the one time.
The security deposit.
The number one reason for lawsuits is security deposit issues. Make sure a tenant fills out a move-in form that lists any pre-existing damages and that you take pictures. Of course, I don’t expect you to have any glaring damages with a unit you’re renting, but a scuff here or a scratch there should be noted at the outset. When a tenant moves out, do a walk-through of the unit and photograph any damage. You will need photos of the damage and a bill for the repair in case your tenant disputes the charges. You have to refund a tenant’s security deposit within 30 days, so it’s important to take care of this quickly once they’ve moved out. Also, make sure that part of the deposit is non-refundable to cover cleaning. You will want to bring in a professional cleaning company to get your rental ready for the next tenant.
Run a proper credit and background check
A lot of time, new landlords just want to get someone moved in without running a credit and background check. As I said earlier, never do this. You ALWAYS want to run a credit and background check. There are rental screening websites that do this for you. You pass along the charge to the potential tenant for the application fee. Never assume or give people the benefit of the doubt. It’s okay to trust, but also verify.
Fix what is broken
If you want quality tenants, you have to be a quality landlord. If something is broken then fix it quickly. By law, you have 10 days for major repairs. Have a handyman on call who can fix the problems as needed. Also, don’t let the tenant fix things on their own.
If you follow these tips, you’ll be setting yourself up to keep your units occupied with responsible, appreciative tenants who will maintain and even enhance the quality of your property.