With nearly 12 years of experience as a property manager, I’ve seen a lot: the good, the bad, and the really ugly. I’ve learned that because you work with people (the property is the easy part), no two situations are ever the same.
But the more you know, the more you’ll be able to handle whatever comes your way, from repairs and difficult tenants to new city ordinances. That’s why I attend a landlord training class every so often. No matter what, I always learn something new.
Whether you’re a new landlord who wants to figure out how to manage your recently-acquired rentals or a seasoned veteran, you might be able to avoid some difficult situations by reading about what I discovered at my latest class.
1) Always have a lease
Whether you’re renting to your best friend or a stranger who answered your Craigslist ad, you need a written lease or a “rental agreement.”
The content of your lease matters. A lease should include things like the duration of the tenant’s stay or if they will be renting on a month-to-month basis. Be sure to specify the amount of rent due and the rent due date on the lease, as well as consequences for non-payment of rent (such as late fees).
Your rental agreement should outline who is responsible for utilities: garbage, sewer, water, electricity, and yard maintenance. This is your opportunity to set rules and boundaries in regards to pets, quiet hours, guests, and whether someone can run a business out of the property. A lease spells out how you’ll give notice to a tenant and vice-versa; it’s also an opportunity to collect emergency contact information from a tenant, which may not seem important now, but under certain circumstances, it can be essential.
Be sure to include what happens once the lease ends. If the lease expires in 12 months, does it automatically go month-to-month after the 12-month period, or are both parties required to sign a new lease? You’ll also need to check your state and city’s regulations regarding how much notice is required if you don’t want to renew your tenant’s lease.
While there are many places you can get a general lease agreement, it’s important to be sure the lease contains everything you need and that it’s compliant with your local laws. You can hire a lawyer to draft a lease that’s specific to your property.
If you use an electronic lease, I recommend getting it signed digitally, which will automatically distribute the ratified contract.
Also, it doesn’t hurt to walk through all the lease clauses with the tenant prior to signing it. It’s a good opportunity to go over policies or rules you want to emphasize, and clarify your expectations. Have all your policies and rules in writing, especially the ones that aren’t covered in the lease, and be sure to email these to the tenant, preferably before move-in.
If possible, meet with the tenant in person, which gives them a chance to ask you questions about anything they may not understand in the lease. I’ve found that if tenants understand your expectations from the start, there will be fewer problems down the road.
2) Get a lawyer
Using essential forms, like a lease, can save a lot of hassle and time. But that’s no replacement for establishing a relationship with a lawyer who specializes in tenant/landlord law in your city.
Landlords may find themselves in sticky situations at some point, so it’s important to consult an expert before acting on a situation or complaint beyond basic maintenance.
For example, once I unknowingly rented an apartment unit to a tenant who was a drug user and dealer (even after thoroughly screening him). After he lived in the unit for a few months, neighboring tenants said they could see what they thought were drug-related transactions happening through the window of the tenant’s apartment. And they noticed people coming and going from his unit at all hours.
Even though everyone knew what was going on, there was no way to prove that the tenant’s “guests” were involved in illegal activity, and no way to prove that what was being passed through the windows were actually drugs. How was I going to get the tenant out of the apartment?
It took three different lawyers and a lot of strategy to finally figure out a legal way to evict the tenant. The third lawyer drafted a violation letter that scared the guy enough to prompt him to give a 30-day notice (he was smart enough to know he didn’t want an eviction on his record).
Before the lawyer letter, we had issued other violation forms on our own that were either incorrect forms for the situation, or not filled out correctly, and the tenant basically ignored them. If your local laws are really strict, your forms aren’t filled out 100% correctly, and if you’re unsure of the exact rule the tenant has violated and whether it will hold up in court, the judge might throw out the case and you’ll have to start from zero. Even though it’s expensive to hire a lawyer, most likely they’ll save you time and money in the end.
Because landlord laws and regulations are specific to a city and state, it’s imperative that your lawyer stay on top of the latest ordinances. Trust me, it’s not worth your time to learn the letter of the law when it comes to tenant matters. The laws change frequently and it can be hard to interpret them correctly.
Lawyers can help draft forms like leases that are specific to your property, as well as any type of notice to tenants. Beyond including exactly what’s needed to hold up in court, letters from lawyers typically appear more official and/or threatening than a scathing email from a landlord.
Bottom line: if you suspect dangerous, illegal, or lease-violating activity in your rental, contact the police and get a lawyer involved immediately.
Now that I’ve scared you into never wanting to own a rental property, know that most tenants and landlords are able to resolve disputes without a lawyer, and oftentimes, if there are a lot of issues, the tenant will just move on.
3) Document everything
Make sure to document everything. I know this can be tough if you don’t live at the property you own/manage, but it’s likely if there are problems, you’ll know about them, either directly from the tenant or a neighbor. Make friends with your rental property neighbors; they can be your biggest ally.
Sometimes bad tenant behavior isn’t cause for a violation, but that doesn’t mean you shouldn’t keep a record of it. For each tenant, start an electronic file that you can easily access. Make notes of things like maintenance issues you’ve completed and any tenant or neighbor complaints. If you get a call from a neighbor about a loud party at your property, add the date and time of the call and approximate date and time of the disturbance to the file. Should you need to eventually hire a lawyer, the more documentation you can provide, the stronger your case will be.
Include all notes regarding maintenance. Knowing when you purchased and installed a new fridge, for instance, will help you determine if wear and tear on the fridge was normal or excessive. If you drive by the property, note the condition of the yard and exterior of the dwelling.
As a landlord, you have the right to inspect the property (with proper notice, and not excessively) from time to time. As a general rule, an inspection every six months is appropriate. If you have to enter the property for a maintenance issue, take note of the interior condition at that time and document it, so you don’t have to disturb the tenant later.
4) Know the law
You don’t have to be an expert on tenant/landlord regulations, but it’s important to educate yourself on any major changes to the law. There’s a good chance your tenant will be keeping up with anything that might affect their living situation—good or bad.
Things to be aware of:
- The amount of time needed for a termination notice. (It’s usually between 30 and 90 days, depending on the city, and it varies for landlords and tenants. Some states even allow for an immediate termination for severe or repeat violations.)
- What constitutes a no-cause termination versus a for-cause termination notice.
- How much and how often you’re allowed to raise rents, and how much time is needed for notice of those changes (up to 90 days, in some cases).
You can find information on these topics on Landlordology and from multi-family housing associations in your city or county, and sometimes the changes are described in local newspaper articles. Your lawyer is also a good resource.
Even though some of these issues may seem daunting, don’t let them deter you from becoming, or continuing to be, a great landlord. Once you establish a system for handling any issues that arise, you’ll feel confident that you can handle anything (and anyone!) that comes your way.