1. Put everything in writing. Although technically, oral contracts are binding in most states, unless a conversation is transcribed onto paper (or admitted to by both parties), it’s as if it never took place in the eyes of the law. Use a tenant Log sheet to make notes of dates and specifics of conversations or reiterate any verbal understandings with a follow up letter to the tenant, a copy of which should be filed. Never underestimate the significance of even the smallest verbal requests or arrangements.
2. Never give someone access to the rented premises until they are approved, the lease is signed and money is exchanged. If you allow someone to take possession prematurely, they can be considered a legal tenant and are protected by applicable law. Even allowing a “probable” tenant to store personal belongings in the premises can constitute giving them tenancy. This means checks must be cashed or cleared prior to the tenant taking occupancy. Better yet make it your policy to only accept money orders or cashier’s checks at move-in.
3. Be strict about rental payments! If a tenant’s rent payment is late or their rent check bounces, always charge associated late fees, bank charge reimbursements, returned check fees, etc as specified in the rental agreement to demonstrate your intolerance for it. If a check bounces more than once, make it a strict policy to require all future payments to be made by money order or cashier’s check.
4. Beware of roommate situations. Having multiple tenants as roommates can be a potential can of worms. Be very clear with each tenant about their responsibility to uphold the terms of the lease both individually and severally. Also make it clear that issues over damages and security deposit refund disbursement will be their responsibility and that no refunds or credits will be given by you to roommates who move out early until the lease termination date. When refunding security deposits or other credits, make checks payable to all parties as stated on the lease. If one roommate moves out, they will not be removed from responsibility for the lease unless approved by you. Do not allow another to take his/her place without being approved as a tenant at which time you can create an addendum to the lease or create a new one altogether.
5. Keep your tenants happy. A respectful landlord-tenant relationship goes both ways. If you take care of repair and maintenance issues in a timely fashion, make every effort to accommodate your tenants whenever possible and respect their time and privacy by properly notifying them prior to your visit, they will be much more likely offer the same types of courtesies to you. A happy tenant is one who will be more inclined to pay their rent on time, take care of your property and stay for a longer period of time.
6. Maintain and update your property as necessary and appropriate. If your property is unkempt and in disrepair you are certain to alienate good tenants, most of whom want a nice place to live. The amount of money you may pay to keep your property looking clean and neat will reap great dividends in the long run. Also, take into consideration what your goals are when budgeting for improvements. For example, if you plan on keeping your investment for the long term, then plan on the need for capital improvements such as a new water heater, roof and carpeting. When deciding on these items, remember that in many cases you will be better off paying more for quality purchases that will last longer and save you money in the long run.
7. Join Organizations. You should be able to find local real estate groups full of people just like you who are happy to share their knowledge and resources. Often they will have regular meetings to discuss landlord-tenant issues and will provide tips and forms applicable to your local jurisdiction. The relationships you make here could be your most valuable in terms of getting free advice in a timely manner. You may also purchase memberships to online industry sites many of which provide a library of reference and educational tools, monthly tips, help with credit reports, tenant screening, etc. (See Internet links section on page 22.)
8. Refine and revise. Take all the information you can, apply what works, reject what doesn’t and figure out what works best for you given your current interests, needs and goals. Continually develop your management strategies to fit different needs at different times. For example, you may want to maximize your rents as much as possible in the early years of property ownership. Then later, when rent values more than cover your costs, you may determine that a solid long-term tenant is worth renting your property well under market value.
9. Always verify move-in funds. Require money orders or cashier’s checks or go to the applicant’s bank and cash their check (calling their bank to verify funds is not sufficient since it can change at anytime). Once a tenancy has been established you may accept checks as long as they are always honored.
10. Be diligent about collecting late fees. You will make a very important statement to your tenants about your intolerance for lease violations by being strict about your policies. Being lenient, even on the first violation will give the wrong impression about the kind of landlord you are.