2 Ways To Avoid Trouble With Tenants
When you originally envisioned owning an income property, you probably imagined a steady infusion of rent checks, nice tenants, and respectful visitors. Unfortunately, the dream of property ownership can become a nightmare if you rent to the wrong people, or if they don't understand what you expect. Here are two ways to avoid trouble with tenants:
1: Go Over the Contract In Great Detail
Have you ever mentioned an ongoing policy to a new tenant only to be confronted with a blank stare? Although it might be covered in great detail in your original rental agreement, some people don't read things before they sign them. In fact, research has shown that about 27% of tenants don't review or understand rental policies before they enter into a contract.
To fend off problems, don't sit idly by while new tenants sign your rental agreement without going over it. Ask them to read it, and then walk them through key points of the contract. Here are a few policies you might want to go over in great detail:
- Parking: If your local HOA has rules about parking or the city needs cars off of the street during sweeping days, you might need to clarify the parking situation. Make sure that tenants understand where to park and when so that you don't end up paying HOA or city fines.
- Noise: A noisy tenant can be one of the most frustrating problems any landlord can deal with. If you live on-site or manage adjacent properties, talk with new tenants about when they can use their surround sound system, blast music in the driveway, or have noisy get-togethers.
- Occupancy: You might feel comfortable with that new tenant, but how do you feel about their brother who was recently released from prison? Talk with potential tenants about who will use the property so that you aren't left managing people you didn't interview.
After you go over the contract, ask the tenant if they have any questions. Try to get a feel for their willingness to comply with the rules so that you can decide whether or not to rent your property to them.
2: Hire A Property Management Company to Screen Tenants
If you really want to fend off trouble, consider hiring a property management company to screen potential tenants. After you gather your application paperwork, you can give it to a property management team who will do your due diligence for you. These businesses know how to spot problems early, so that you don't end up dealing with problems later. Here are a few ways that property management teams might identify potentially difficult tenants:
- Criminal Background Check: Although you might like to give people a second chance, renting your property to a local methamphetamine manufacturer might not be good for your own business. Fortunately, property management teams can inspect past criminal charges so that you know who you are really dealing with.
- Credit History: You can tell a lot about a person by their past financial mistakes. Property management companies can check applicants' credit histories to look for prior evictions, collections accounts, and late payments. This information might help you to avoid tenants who always pay late or who are prone to rental problems.
- Call References: If you manage more than one property or work a day job, you might not have time to call each and every reference listed on the rental application. Fortunately, property management teams have the resources to carefully call each reference, interview the person, and understand more about each potential tenant.
In addition to gathering important information about your rental applicants, property management teams can also conduct these duties in accordance with state laws. Landlords aren't allowed to discriminate against individuals based on sex, race, familial status, or disability, which is why working with professionals who know the rules is crucial.
Taking the time to pick the right tenant and thoroughly review your policies might help you to fend off frustrating problems down the road. Visit http://www.northstarpropertyservice.com to learn more.