Selecting a bad tenant can be more expensive than selecting a good one. So why would you ever select a bad tenant? A bad tenant will lie to you, will steal from you, and will under the cover of night move out trashing the apartment leaving a colossal mess for you to clean. Forget about the security deposit he made, it will not cover these added costs. Not only does that landlord have the more substantial costs of repairing and cleaning the apartment before it can be re-rented, but he now has to incur the cost and undertake the time consuming process of "selecting" yet another tenant. Bad tenants are bad business. Is this why you became a landlord?
Selecting a "good" tenant means that the landlord has less tenant turnaround, has tenants that treat the rented space as their own, has more consecutively rented months (less vacancies), which means more rent checks to cash, has less cleaning costs, less applications to review and more time to grow his business (or to do other stuff). Our Comprehensive Lease Agreement Kit has everything you need to properly manage your rental properties. Where you have questions, we have answers.
Nurture the Landlord-Tenant Relationship
The landlord needs to realize that the tenant is not just an asset (a monthly rent check) but also a person with certain living standards and expectations. Right from the start, the landlord should seek to nurture the landlord-tenant relationship. The formula is not complicated but, like a slowly cooked pot roast, requires time. The tenant wants to stay because the rental unit has become the tenant's home. The landlord is willing to continue to rent to the tenant because the tenant takes care of the apartment, pays the rent on time, and is genuinely a good neighbor (so the landlord does not hear complaints from the family next door).
Why is it important for the landlord to foster a good relationship with the tenant? A bad relationship will inevitably cause collateral damage that will make any possibility of a profitable relationship disappear. Bad tenants are a liability not an asset.
How to select a "good" tenant
First you must screen the prospective tenant. We have a comprehensive application that you can use to help you evaluate your prospective tenants. Have the tenants fill out the application completely. Actually undertake the time to screen the tenants. Call the tenants' references, call prior landlords, prior and current employers, verify the tenants' banking information. Do a criminal background check. You should know whether you are renting to a sex offender. There are certain public reporting obligations the sex offender must undertake. Do you want your property listed on the Internet as the residence of a sex offender? Whether you mind or not, you should at least know. What is your prospective tenants' credit score? You need to know if the tenant pays his bills on time and if not, you need to know why before you agree to rent the apartment to him. Ultimately, you need to develop a tenant persona. Once you have the persona developed, ask yourself: Is this someone I could live with?
Besides selecting "good" tenants, what else can the landlord do to be profitable? Knowing the law will assist the landlord in managing and growing a profitable property management empire. Well perhaps not an empire, but his rental business will be more profitable by simply knowing the law. Knowing the law will lower your costs of doing business as well as having to spend less time on managing messes that could have been avoid if you only knew what the law required.
Here are some legal rules that the landlord should know because, if unknown, could impact the bottom-line.
Gaining Reentry of the Unit when Occupied
The landlord may think that because he owns the building he can enter the rental unit whenever he wants. Wrong. To be compliant in almost every jurisdiction, the landlord should follow a simply policy: provided reasonable advanced written notice of at least 48 hours. For instance, the landlord cannot just enter the apartment at any time to show the rental unit to a prospective tenant without notifying the current tenant. Each jurisdiction has different notice rules in place and it can get rather complicated. There are different notice provisions for different kinds of reentry. Was reentry for routine maintenance? Was it because of an emergency? Each jurisdiction provides for different notice requirements when based upon different reasons. Our Comprehensive Lease Agreement Kit has a manual that is up-to-date and provides the landlord with what his jurisdiction requires of him before he reenters the rental unit. If the landlord violates these notice provisions, he may be exposed to liability. Avoid the risk; know when you can legally reenter the unit. Violating the tenant's space like this could turn what was a good landlord-tenant relationship into a bad one. And bad tenants cost more.
Reentering an Abandoned Unit
In many jurisdictions, the landlord cannot simply reenter an abandoned apartment. The landlord, in such cases, still may be required to seek a court order before reentering. Again, you can refer to our manual for what each state requires the landlord to do when the tenant seems to have vanished and abandoned his personal property.
Jurisdictions do vary. Some provide that you need to give certain notice while others say no advanced notice is required. Yes it can get confusing. We can say that where the rental property is located will dictate what the landlord is required to do to gain reentry.
Why should the landlord care? The landlord can be subject to additional fines and penalties if the landlord simply sold or threw away the abandoned property. There are plenty of legitimate reasons why the tenant may have vanished. He could have died. And now there is an estate. If the landlord simply got rid of the tenant's personal property, the landlord would be liable to the tenant's estate. And now you can fight over what the value of the discarded property was in Surrogates' Court. Another added expense you could have avoided if you knew the law. Understand, the landlord can recoup the costs of storing and handling the property, but only if he followed the letter of the law.
Most jurisdictions have promulgated Abandonment Law, which specifically imposes certain obligations on landlords when dealing with abandoned property. In most cases, the landlord must store the personal property for over 30 days and attempt to locate the tenant through advertisements before selling or getting rid of it. Once the landlord has satisfied what state law requires, the landlord is free to dispose of the personal property as he sees fit. If the landlord fails to follow the law, the landlord may be subject to additional costs significantly impacting his bottom-line.
Federal and State Discrimination Laws?
Discrimination against a prospective tenant goes beyond simply denying the prospective tenant an apartment. The way you advertised the apartment could rise to the level of a discrimination claim. In our litigious society, the prospective tenant will sue first and ask questions later. Failing to respond to a perspective tenant's application could rise to the level of a discrimination claim. And whether the claim is frivolous or not, you will have to respond, which means you have to open your checkbook, write a $5,000 retainer check and retain a competent attorney. Learn how to avoid frivolous or even meritorious discrimination lawsuits. Understand also a discrimination claims could even be based on your conduct during the tenancy. You could be subject to a discrimination suit if you demand a higher security deposit from one tenant and a lower amount from another for no particular reason. In short, be consistent in your dealings with your tenant unless you have a legitimate reason not to be.
Be a smart business landlord and know the law. It will impact your bottom-line.