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 your place and not just like it 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 his eyes. Usually, after showing the property, the love prospect will say, “What do I do now?” and you will have a deposit waiting. If you walk out of your space saying “I still have a couple places to see you,” 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 such as cash, money order, or cashier’s check if moving quickly. The check is fine as long as you have about 10 days before the move or have personally verified the account, as a check can go bad several days later due to a bounced check or stop payment.
RULE# 2.-The Lease- A valuable piece of documentation is the lease. It sets out the house rules, when rent payments are due, the length of the lease, what happens if things go wrong or the tenant doesn’t comply. 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 statutory 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 that rent payments were or were not made. If you make this your rule, then it is difficult for the tenant to dispute that the rent was paid when in fact it was not. The tenant also could not 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, collect a percentage of the rent or set a flat rate. Typically, the charge is 5 or 10%. You have to make them feel a bit responsible for paying the rent.
Partial payments can cost you. Once you accept a partial payment, you are giving the tenant permission to stay and possibly forfeit 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: Typically, a one-month bond is held to compensate the landlord in the event of any destruction to the rental unit. Under Florida law, that money must be deposited into a bank account and given to the tenant by the bank that holds it and also state if there is an interest account, who receives the interest and approve it with the tenant.
Security should not be used for rent. It is your only leverage tool to stay by your side. Once allowed to be used as back rent, the tenant could do anything to your premises and you have no compensation. The tenant can after using it say that he changed his 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 making excuses for not paying your rent. If there are excuses, they will surely surface at the time of collecting the rent.
Have your team of maintenance professionals on hand. If you’re on a low budget, hopefully you’ll have 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 you need 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 carried out. 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 “breaks”. Replacing light bulbs should not be part of maintenance, except when moving. Tenants need to learn this early on, otherwise you will have an insane amount of repair calls.
RULE #6. Tenant Evictions – Unfortunately, sometimes a tenant has to be removed from the property. Perhaps this happened as a result of non-payment of rent or misconduct that violated the lease.
For non-payment of rent, this requires a 3 day notice to vacate in Florida. Other violations of the lease require a 5 day notice. The notice must be delivered in person or posted on the door if you are not there and a copy left in the mailbox. I tend to take a snapshot of a door hanger with a timestamp. After the 3-5 days, it is up to you, the landlord, to file a complaint with the clerk of court and have the eviction carried out. Remember that the 3 or 5 days do not include holidays or weekends.
Remember that eviction is a last resort, communication must be used first. Eviction means that communication has broken down and the relationship cannot be repaired. If you are behind in rent, ask why. Are there any work related issues? Does the tenant have a plan to resolve the problem? If it’s a behavior related issue, can the tenant stop the behavior from him?
Eviction can be a long process. It can take months in some states or as little as 2 weeks in homeowner-friendly Florida. You as the landlord can lose a month’s rent plus eviction costs, but if they don’t contact you, then by all means evict. Several tenants are betting on your delay and that delay usually costs the landlord a few months’ rent.
