Protecting Yourself And Your Property From Tenant Negligence │ Alexander Rek
Whether you are a sophisticated investor, renting out your vacation home, or an accidental landlord, you need to take all of the necessary steps to protect yourself and your property from tenant negligence.
National statistics are not in your favor when it comes to be being paid on time or in full by your tenants. Also, since the financial collapse of 2008, many localities have implemented tenant biased ordinances due to the issues that have arisen with the large amounts of foreclosure. The following is what you, as a landlord, need to do in order to protect yourself from your tenants.
Rental Application
Renting a property is a privilege. Make sure your prospective tenant proves that they will not only pay on time, but also keep the property in operational condition. Use a rental application as an opportunity to qualify your prospective tenants. Make sure to include the following information so that when completing the below steps, you are able to obtain accurate personal information.
•Full name and possible aliases
•Birth date
•Social Security Number
•Drivers license number and state of issuance
•Current and previous address
•Landlord name and contact information
•Reason for leaving current rental
•Personal, banking, professional references
•Current employer and contact information
Credit, Background, Employment and Reference Checks
Now that you have all the information needed to perform your tenant due diligence, pay to run a credit report and background check. There are multiple websites available for this, although most leasing representatives and large management companies use www.mysmartmove.com . Review the credit report for delinquencies, large lines of credit, collections and anything that appears problematic. Check their criminal background to make sure that they have not been convicted of any serious or financial crimes. Next, contact their previous landlord. Ask questions such as, was the tenant on time with rental payments? Did he or she comply with the lease? How did the tenant leave the property? When did he or she leave? Contact the applicant's employee for verbal verification of employment. If you have an inclination of additional aliases, you can verify the tenant's true identity by inspecting their insurance documentation and tax returns. If they object to providing you with these documents, coax the objection by saying that they can black out any ultra sensitive information.
Lease
One fact that is commonly overlooked by most new landlords is that the landlord provides the lease. Do not use a basic lease that is downloaded or provided by the locality. It is your property, therefore you determine the provisions that are included and those provisions should be for your benefit and safety. Clearly state the variables that will be included in the lease such as the lease date, rent amount, occupants, etc. Also make sure to include provisions that state when the rent is due, the late fee, the damage fee, your right to enter, etc. Spend the money to have a real estate attorney draft the contract. An experienced attorney will include everything that protects you from tenant negligence.
Security Deposit
Depending on your locality, you should consider asking for the equivalent of two months' rent as the security deposit. This will protect you against any minor damages as well as a tenant breaking their lease. Make sure that you open up a separate bank account for the deposit; most municipal laws require that the funds are not comingled. Also, you will have to pay interest on this money. If your rental property has multiple high-end upgrades that would not be covered by the two month deposit, it is in your best interest to obtain additional insurance to cover any damages.
Check-In and Check-Out
To insure that your property is returned to you in its original condition, draft a detailed Check-In and Check-Out document that lists all of the rooms as well as their contents (lights, appliances, blinds, etc). Have the tenant sign and acknowledge the condition and the fixtures of the rooms prior to move-in. Take detailed photos, with dates, to show the property's condition at the outset of tenancy. In the case of a dispute at the expiration of the lease term, you will have all the evidence needed to argue, in your favor, any discrepancies that may arise.
Inspect the Apartment Regularly
Now that you have taken the necessary precautions in qualifying your tenant, be sure to continue monitoring the tenant on a regular basis. Provide the proper prior notice, which is stated in your lease, and inspect the property on a bi-monthly basis. Make sure the tenants are maintaining the property to your standards and complying with the terms set forth in the lease.
Investment properties can be lucrative sources of income as well as stable long –term investments. By qualifying your tenants, having a rock solid lease, and keeping evidence of the original condition of your property, you will have taken all the necessary precautions in case you engage with a negligent tenant.
Become a Community Contributor.
