- You can not grow a real estate investment portfolio without them.
- The reason so many people do not own rental property.
How do you, as a property owner, handle (manage) tenants?
Good paperwork – fair to both the property owner and the tenant, legal in the state in which the property is located, non-discriminatory.
We have a lot of properties which means we have a lot of tenants. Every new tenant comes with their own unique issues. Our office could spend a lot of time and energy, and actually does spend way too much, trying to adapt to each new personality type and working to keep everyone's wishes and desires met.
However, in the real world, meeting everyone's wants is not possible. In the property management world, it's not feasible, necessary, or the best way to run your business. If you have only one rental property or if you have hundreds, you have a property management business and should handle it accordingly.
When a new tenant applies for your property, they should fill out a detailed application giving you important information such as employer (which you should contact as a reference), income (confirmed by tax returns or pay stubs), social security number, drivers license (both of which you should make color copies), previous landlord (which you should contact for character reference), and contact names and numbers (so you can follow up in emergencies or if they skip out on you).
Once you've run their credit report and criminal background check (and you should), they bring to you the necessary certified funds and sign contracts. The paperwork. The details of how they will perform while living in the property and how you will provide and care for them as tenants. All spelled out. Clear, detailed, precise, agreed to by all parties involved, before they move in.
The paperwork is the way you maintain your sanity. If someone wants a change, point to the paperwork. I can / can not make the change because the paperwork does / does not allow it. Very simple for both you and the tenant to understand. And, you both agreed that it would be this way the day the contracts were signed, initiated, and dated. If you do not agree at the signing table, do not go forward.
DO NOT DISCRIMINATE. This is one of my favorite go-to's when a tenant is explaining to me why I should be able to make an exception for them, their dog / cat, the wall color, due dates, etc. IF YOU MAKE ALL OF YOUR OTHER TENANTS FOLLOW THE RULES AND YOU BREAK A RULE FOR ONE TENANT, YOU ARE GUILTY OF DISCRIMINATION. You do not want to go in front of a judge over a fair housing issue. Fair housing goes far beyond race and sex. Your rules for one MUST be your rules for all or you can be brought up on charges of discrimination.
For example, if you file for eviction on the 11th day after rents are due for all of your tenants, but you do not for one or two of them, that is discrimination. You either have policies or you do not and trust me, life will be far easier for everyone when you do.
If you have tenants, you must have a good paperwork that is strong in its word so everyone knows the rules and how to obey them. Do not make up your own paperwork, ever. Always use contracts crafted by attorneys in your state. If you use contracts created by the Real Estate Commission, you must be a real estate agent. If you are managing your own properties and using your own paperwork, you can get paperwork created by the commission and take it to your attorney for modification. Just be sure anyone who alters your forms is able to defend them in a court of law.
It's all about the paperwork, for both you and your tenants. Do you have good paperwork? If not, what needs to be changed and what are you waiting for?