As summer comes to a close and the real estate market starts to cool down, so comes the end of our three part Fundamentals to Property Management series. In this post we will be covering some of the major aspects that make for a good Tenant-Landlord relationship, and a few tips that if applied correctly can save any landlord both time and money.
First, before we jump into this topic, let’s recap a few of the key points that we covered in the first and second part of this series. In part one we talked about how to list your property for rent, covering everything from how to do a rent analysis to marketing tactics proven to be successful in driving quality applicants to your property. Then in part two we went over some basic tactics we use to screen those applicants, and all the bases you should be covering to ensure you are doing your due diligence when selecting a tenant. If you haven’t read those already I encourage you to go to our website and read those before diving into part three. Now we are not saying we hold all the answers to all the problems that are associated with marketing and leasing rental properties, but we are confident that everyone from first time landlords to experienced property managers may learn a thing or two. Of course we are always looking to engage with our audience and are eager to be apart of meaningful dialogue. So whether you learned something new or want to share some different ideas please do so on our Facebook page. We look forward to hearing from you!
Now onto what is arguably the most important, if not definitely the most demanding, aspect of landlording; the Tenant-Landlord relationship. So by now you have purchased your rental property, you have done all the necessary renovations and upkeep to make your unit rent ready. Then you would have also listed your property for rent online and/or somewhere else that you feel to be a valuable location to market your property. You then would have gone through and vetted all the applicants and selected who you believe to be your number one candidate. Now depending on the amount of renovations needed and time you have available to spend at your rental this process should take you anywhere between one to two months. Of course if you feel like getting all those steps done isn’t going to be possible in a reasonable amount of time, then you should give a property management company like ourselves a call to see how we can help you minimize the amount of time your property is off market and not performing. Nonetheless you have selected your tenant and signed a lease with him/her. Now it’s time to sit back and watch all that hard work and sweat pay off right?
Unfortunately….. that just isn’t the case in this business. The month or two spent getting your property leased is nothing compared to the years of tenants you have to manage. Because the fact of the matter is, until you decide to sell your investment, or give the burden of managing your property to someone like us, you will have to deal with tenants.
Tenants, whether you love them or hate them, are the lifeblood of your investment. Every dollar of rent they don’t pay, or every day your unit sits vacant is money out of your pocket. So we try to minimize these losses by establishing not good, but GREAT Tenant-Landlord Relations. Here are a few tips and stories to help you build a better, more professional relationship with your tenants.
1) A Firm but Fair Lease
Additionally, This helps to establish expectations for both you and your tenants. For example we are firm on our policy for filing an eviction on the date outlined in our lease agreement, yet we set a date that is fair in respect to the nature of unexpected events in people’s lives. (For most of our leases that date is the 11th of each month). Another good tip with you lease is to always be reviewing it and making adjustments so as to maximize the efficiency and effectiveness of your investment.
Too many times have we heard stories from other landlords with leases that weren’t carefully vetted first. For example, we have heard of some investors losing their whole portfolio for waiving late fees. Waiving late fees has been judged as a discriminatory act and violates Fair Housing laws. So be firm with your policy of administering late fees, but fair with the value for which you ask. Quick Tip; many states now have legislation that caps the amount landlords can demand in late fees, so always check with your lawyer to make sure you are operating within the bounds of the law. Again a good property management company like ourselves have leases that are designed to protect owners from all foreseeable and unforeseeable issues. Also adjusting clauses to make sure you are competitive in your market is wise in ensuring you are keeping those quality tenants happy. Your lease and the relationship you have with your tenants is all a balancing act. To be either too strict or too forgiving could spell both financial trouble and/or emotional heartache.
2) Expectations and the "growing pains"
One of the better examples we can provide for you, and a tip as well, is before the tenant moves in, make sure you have a conversation about what we call “growing pains.” You know as tenants move in and get comfortable they will expose some defects in the property not known to you. For example some common issues we used to get, but not so much anymore because we now keep an eye out for them, are non-functioning outlets, burnt out microwave lights, degrading plumbing with toilets or sinks, bi fold doors that aren’t hung correctly, and washer and dryers that don’t seem to perform on some settings. So tell your tenants that they will experience some growing pains, and have them create a list, and after 3-4 weeks have them follow up with you to come and check out the items on the list.
Of course if major appliances aren’t functional at all or there’s major leaks/floods occuring those aren’t considered growing pains and need to be resolved immediately. But after those 3-4 weeks go by, make a plan to meet with the tenants and walk them through how to fix some of those items. This technique has worked wonders for us and our business. Some renters, and I myself included when I was in college, have this expectation that as landlords we are meant to cater to their needs, others just simply lack the knowledge on how to fix simple issues. So instead of letting our tenants have the expectation of us fixing every problem that may arise we like to take the time upon move in and the weeks following to walk them through some basic techniques when it comes to maintenance, and some proactive behaviors that help to ensure a functioning property.
By doing this you can expect to see both a decline in maintenance request and a well cared for property. And the added bonus is that our tenants are actually more pleasant to deal with. This is because they try to resolve some issues themselves and if they can’t when they call to report a problem they have the basic know-how on how to explain the situation to me. They not only feel more respected, but they also feel helpful, and who doesn’t like to feel helpful/useful? Training your tenants may require more time upfront, but I promise it will pay off in the end.
3) Proactive Tasks
Firstly, in their lease they are responsible for the timely replacement of air filters in their HVAC. There is a reason why HVAC units have replaceable filters and it’s smart to share this knowledge with tenants. And secondly, in addition to being designed to slow the buildup of dirt and dust from getting into your duct work, HVAC filters are helpful in keeping your condensation line clean and clear. Now whether you manage 100 units or are just getting started with your first unit I can promise that you will have to deal with clogged HVAC condensation lines. Unfortunately this means you have to deal with leaks, or floods depending on the attentiveness of your tenant, this is because when the line clogs the condensation made from your unit will have nowhere to go except spill over and pool up on the ground below your unit. This can be especially problematic if you own a condo or apartment that sits above other units, because it may be weeks until the tenant realizes water is collecting on the ground, and that’s usually about the same time that the unit below will notice a leak on their ceiling.
This of course means a pricey expenses that may just eat your cash flow for months to come. So we tried to mitigate our risk for this event by showing our tenants not only where the air filter is and how to change it, but also where the condensation line is. We also encourage our tenants to change their filters monthly and in doing so we also encourage them to take a look at the condensation line and pump for signs of dirt or dust collection that may lead to a clog. Now for a tip, if you see the line is starting to clog, or is clogged, we have found that most of the time you can blow through the line and that will do the trick, however you can always go buy a new piece of tubing from Home Depot and replace it yourself for very cheap. This is just one of the many little proactive steps we encourage our tenants to take, and trust me when I say that taking small steps like that now will save you hundreds if not thousands of dollars down the road.
One other proactive step we show our tenants is where the main water line shut off valve is, and where the external faucet shut off valves are. This is important for two reasons. The main line shut off valve is useful for those rare, but expectable cases of leaks or flooding from pipes inside the wall. You can always stop the flow of water to a leak by shutting off the water supply to the whole house.
This will buy you and your tenants some time to assess the situation and also help to minimize the damage done by the water. The external lines are good to know how to shut off come winter time. We make it clear that by not shutting off water to the outside faucets the tenants run the risk of bursting pipes in the winter. And that can be a very costly expense.
Of course there is a whole list of other tips and strategies that a landlord can deploy in the effort of maintaining an effective and beneficial relationship with their tenants. However, for the sake of this article we believe that these few tips should cover the basics needed to get you on a path to a better tenant-landlord relationship. By setting out to have a lease that is not only effective, but is understood by the tenant, and you try to teach your tenants a few things about the property and how to maintain it you will be setting not only yourself, but your tenants up for success.
As always, we love to hear from our readers, so feel free to contact us by email or through our Facebook page. And if you liked what you read here make sure you check out the other articles for more useful tips and insights. Also don’t forget to like us on Facebook to keep up to date with all things property management and to be the first to see when new articles are published.