6 Property Management Rules from the Rental Bible
Here are some leasing rules that will make your leasing experience more enjoyable and profitable.
RULE #1. Acquire Your Tenant – The first step to making property management easy for you is choosing the right tenant. That means selecting a tenant who loves their place and not just because a loving tenant is a stable long-term tenant. You say ‘How do I know if someone loves my property?’ Simply put, you can see it in their eyes. Usually, after showing the property, the love prospect will say “What do I have to do now?” and you will have a deposit waiting. If you walk out of your place saying “I still have a couple places to see it,” that usually means the prospect is making a safe exit, making sure the door doesn’t hit their butt on the way out. Make sure your deposit is in secured funds like cash, money order, or cashier’s check if the move is quick. The check is fine as long as it’s about 10 days before you move in or you’ve verified the account in person, as a check can turn bad several days later due to a bounced check or stop payment.
RULE# 2.-The Lease- A valuable piece of documentation is the lease. Set house rules, when rent payments are due, length of lease, what happens if things go wrong or the tenant defaults. This is valuable if you have to go to court.
Rental agreements cannot be created by you, they must be created by an attorney. The specifics of the lease must be consistent with state landlord-tenant laws. You can purchase a legally approved agreement and add items to the riders section if needed.
RULE#3. Rental Payments: Rental payments must be made by check or money order. Why do you ask? Create a trail in case you need it in court to prove rent payments were or were not made. If you make this your rule, then it’s hard for a tenant to dispute that rent was paid when it wasn’t. The tenant would also not be able to say that his roommate stole the cash or something similar. I always give a receipt when I collect the rent. You can also make payments convenient for tenants by allowing them to make bank deposits. Simply make deposit forms several months in advance with your bank account number on each one.
Late payments should require a penalty after a grace period. The grace period is usually 3 or 5 days. After the grace period, charge a percentage of the rent or set a flat rate. Usually the load is 5 or 10%. You have to make them feel a bit responsible for paying rent.
Partial payments can cost you. Once you accept a partial payment, you are giving the tenant permission to stay and possibly lose the month’s balance by law. Partial payments must be accompanied by a receipt indicating the remaining balance and when it is due.
RULE #4. Security: A one month security is generally held to compensate the landlord in the event of any destruction to the rental unit. According to Florida law, that money must be deposited in a bank account and the tenant must be given the bank that holds it and also indicate if there is an interest account, who receives the interest and approve it with the tenant.
Security should not be used to rent. It is your only leverage tool to stay by your side. Once it is allowed to be used as a back rent payment, the tenant could do anything to your premises and you have no compensation. The tenant can after using it say they changed their mind about moving out. That leverage would be gone permanently.
RULE #5. Maintenance – Remember that a happy tenant is a long-term tenant. That means when he calls, you answer pretty quickly. By doing so, you protect yourself from having excuses not to pay your rent. If there are excuses, they will surely surface when it comes to collecting rent.
Have your team of maintenance professionals on hand. If you’re on a low budget, hopefully you’ll have some handyman skills. If not, try to get a talented handyman. You will specifically need an electrician, a plumber, a general handyman and a landscaper on your list. Electrical and plumbing work is such a specific skill set that it needs specialists. A handyman can perform a variety of tasks such as masonry, carpentry, and even roofing.
Organize a time to do the work. Notify 24 hours in advance of the work to be done. As long as you stick to the schedule, the tenant can’t complain that you’re not serious about repairs.
Maintenance does not mean room service for everything that is “broken”. Replacing light bulbs shouldn’t be part of your maintenance, except when you move out. Tenants need to learn this early on, otherwise you will have an insane number of repair calls.
RULE #6. Tenant Evictions – Unfortunately, sometimes a tenant has to be evicted from the property. Perhaps this happened as a result of nonpayment of rent or misconduct that violates the lease.
For nonpayment of rent, this requires a 3 day notice to vacate in Florida. Other lease violations require a 5-day notice. The notice must be delivered in person or posted on the door if it is not there and a copy left in the mailbox. I tend to take a snapshot hanging on the door with a timestamp. After the 3 or 5 days, it is up to you, the landlord, to file a complaint with the clerk of court and carry out the eviction. Remember that the 3 or 5 days do not include holidays or weekends.
Remember that eviction is the last resort, communication must be used first. Eviction means that communication has broken down and the relationship cannot be repaired. If you fall behind on rent, ask why. Are there any work-related problems? Does the tenant have a plan to solve the problem? If it is a behavioral problem, can the tenant stop his behavior?
Eviction can be a long process. It can take months in some states or as little as 2 weeks in Florida, which is homeowner friendly. You, as the landlord, can lose a month’s rent plus eviction costs, but if you are not contacted, then by all means go ahead with the eviction. Several tenants are gambling on their delay and that delay usually costs the landlord a few months of rent.