Author: Alex Delaney
Rental property is an investment. Not only can it generate monthly income, but it can also, with care, become a valuable asset. Make sure that investment works for you. By ignoring the below information, you can put that investment at risk.
- Pre-marketing properties: Pre-marketing is a bad idea. It disrupts the already difficult moving process for the current tenant (risking negative reviews); it lowers the quality of marketing pictures, making the property not present well; and it dates the marketing at online rental sites, causing the property to get buried under more recent posts and making prospects question why the property can’t rent.
- Not thoroughly screening tenants: Bad tenants are a nightmare. While it is impossible to completely weed out bad tenants, it is possible to lower your risks by carefully screening your prospects, looking at their credit history, their work history, and talking to their previous landlords.
- Not addressing maintenance and upkeep: Small, inexpensive repairs can, if unaddressed, quickly escalate. That leak behind the fridge can create water damage and mold in the walls that could cost thousands to repair. A running toilet can cost you a tenant, who finds their water bill has damaged their budget. Vines on a home, or gaps in the soffit, can create an entry point for rodents who can wreak havoc on your electrical systems and insulation.
- Not performing regular inspections: While you want to keep your tenants happy and not invade their space, regular inspections let the tenants know you are serious about the upkeep of your property. Not only will they appreciate the good service of having issues resolved early, (which also keeps your repair costs down), but they will also get the clear message that if you care about the property, so should they. Neglect the home and tenants will neglect it too. If you don’t care, why should they?
- Playing fast and loose with the security deposit, or not requiring enough of one: Security deposits are regulated under state law. Neglecting to keep them in an escrow account can lead to legal entanglements. Not collecting enough of a deposit removes any tenant concern around breaching a lease, or worrying about the condition in which they leave a property. We suggest a month’s rent.
- Not understanding what can be deducted from a security deposit: You cannot deduct damages from normal wear and tear, such as the need to paint walls, or from owner neglect, such as spots in a ceiling from a leaky roof.
- Not being timely with the return of security deposits: There are clear legal codes related to the timeliness of a move out inspection and return of the deposit, or explanation as to why a deposit was withheld. Don’t follow the law and you face significant fines.
- Using a generic lease: Leases are legally binding contracts between landlords and tenants. They should reflect what is legally allowed under local law and should protect the landlord rights by clearly spelling out what is the landlord’s responsibility and what is the tenants. Leases play a large role in evictions. If it isn’t spelled out in the lease, such as responsibility for landscaping, utilities and pest control, or charges for lease violations, you cannot get a judge to rule in your favor on those issues.
- Not conducting move in and move out inspections: Inspections are the key to a return of deposits. If you cannot prove the condition of the home at move in, it can be very tricky to charge against the tenant’s deposit at move out.
There are a lot of considerations when renting a property. If you don’t have the time to run your rental property like a business, you’d be much better protected, and realize a more stable income and better profits by letting a professional company manage it for you.