If you’ve been in the property management industry for any amount of time you’ve inevitably encountered a tenant or two that turned out to be less than stellar. When your business is cash positive, things are great, but when a renter or lessee suddenly stops paying, and you’re faced with a long and costly eviction process, suddenly it’s not quite so sunny anymore. While there’s no magical formula to avoid all risks faced by property managers, there are things you can do to reduce the chances of this situation occurring.
Do thorough tenant screening.
Each and every potential tenant should be required to fill out a detailed application that includes a waiver that allows you to conduct a criminal and credit background check. There are plenty of options available to you for these services, and they do cost money. But, if you can know who to steer clear of ahead of time, it’s well worth the investment.
Verify income source.
Of course, there’s no way to guarantee that a tenant’s present source of income will always be available to them, but you can at least verify that they currently have an adequate source of income that will allow them to stay up to date with the rent. No matter how pleasant a prospect seems, if their income doesn’t match up, it may turn into a problem down the road.
Require references and check them.
Applicants should supply you with at least 3 references of prior landlords. Don’t skip this step! Once you have the list of names and numbers, take the time to reach out. Get a feel for what kind of tenant that person was so you’ll have an idea of what you can expect if you decide to rent to them. If anything seems off, or the references don’t check out, move on to the next applicant.
Conduct home visits.
Provided that you include it in the lease and give tenants adequate notice, home visits can help you stay on top of potential issues before they develop into much bigger (and more costly) problems. It also keeps tenants on notice that they should keep the property in good shape.
Know your rights and understand the law.
It’s important that you have a good understanding of the laws as they apply to landlord/tenant relationships, and more importantly – what your rights are. Do some research and tap into the available resources in your community. You may even consider hiring a real estate attorney that can provide advice as needed, if and when situations arise.
Employ the use of quality property management software.
When everything you need to know is always available to you, at the push of a button, such as rental payment information and violation tracking, you are in a much better position to limit your risk.
Related Post: 5 Red Flags When Screening Tenants
If eviction is necessary, file early.
If it comes down to it and an eviction is necessary, make sure you strike while the iron is hot. Getting a tenant out can take time and the longer it takes, the more it’s going to cost you. File immediately and make sure you stay on top of the time-frames as set forth by the law. The more ahead of the curve you are, the better and more timely the outcome will be.
Of course, the best way to limit your risk is to find (and retain) excellent tenants. By carefully and thoroughly screening, you’ll improve your chances of achieving this goal. And, by knowing your rights and being diligent, you’ll be able to handle negative situations quickly to mitigate your damages.