Sunday, June 6, 2010

What you ALWAYS need to do when you own rental property

Do you own rental property? Here are a few tips for you and your property management company to keep your business running smoothly.

1. Always Screen Your Tenants.
Never rent your property to anyone before doing a thorough credit history, checking references, and doing background checks. Failure to screen tenants often result in problems such as late-paying tenants, or those who damage the property. Your property management company should be able to assist you, (or in some cases completely manage) the tenant screening process.

2. Always Get It In Writing.
It is never wise to enter into a property agreement without a written lease or month-to-month rental agreement. It is important to document the terms of the relationship with your tenants -- including when and how you, or the property management company will handle tenant complaints, emergency and non-emergency repair requests, notice you must give to enter a tenant's apartment, etc. Your property management company should be able to assist you with a proper contract.

3. Always Handle All Financial Transactions Properly.
Establish a fair system of setting, collecting, holding, and returning rent and security deposits. Always inspect and carefully document the condition of the rental unit before any tenant moves in, (and make any necessary repairs to keep it in rent-ready condition) to avoid disputes over security deposits when the tenant moves out.

4. Always Stay on Top of Maintenance.
Maintaining a clean and safe property as well as making the needed repairs in timely fashion is vital to being successful at rental property ownership. If the property is not kept in good condition, you'll likely alienate good tenants, and tenants may even have the right to withhold rent, or sue for injuries caused by defective conditions, or even move out without needing to give notice.

5. Always Provide a Secure Environment.
Your tenants deserve a safe a secure premises. Assess your property's security situation and take the appropriate steps to protect it with proper lighting, tidy landscaping, security patrols where necessary and whatever else you need to do to protect your assets and tenants.

6. Always Let Tenants Know Before You Enter Their Rental Units.
It is not only polite, but in many cases the law to notify your tenants whenever you plan to enter a rental unit. You should provide as much notice as possible, at least 24 hours or the minimum amount required by state law.

7. Always Disclose Environmental Hazards.
If there's a danger such as lead or mold on the property, you need to disclose this to your tenants. You could be held responsible to any health problems your tenants suffer due to these types of hazards. It is always best to remedy the situation properly and as soon as possible, but at the very least you need to let the tenants (and potential tenants) know.

8. Always Work With a Reputable Property Management Company.
Choose and supervise your property management company carefully. Choose a company with a good reputation, references and experience managing the specific type of property you have in that market.

9. Always Purchase Liability and Property Insurance.
It is important to protect yourself by purchasing enough liability and other property insurance. Insurance can protect you from lawsuits by tenants. Injuries, fire and storms damage, burglary and vandalism are all things that can happen, and you should carry insurance to keep a small disaster from turning into a major one.

10. Always Resolve Disputes Quickly.
Dispute will occur eventually—in any time of property relationship. It may be something small—such as a client paying a day late each month, or something big, like the need to evict. But it is important to resolve disputes with your tenants quickly and without lawyers and lawsuits when possible. If a dispute becomes more difficult, you can consider mediation by a neutral third party, (again, your property management company can be very helpful here). By addressing any issue that arise quickly, you will be able to avoid costly and potentially devastating repercussions.

Kuester Property Manager

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