Landlording as a Business
Many prospective investors have asked me if it was worth their while becoming a Landlord. They read the horror stories in the newspapers about tenants that overstay their ‘visit’ for months at a time. These tenants squat while their landlords continue to pay the bills. They read about tenants that have left their newly renovated properties in such a wreck that one wonders how they can find good tenants that would care for their property as they have done.
Prospective landlords also want to know how much to ask for in rent, as they do not want to overcharge or lose money. Asking for too little over the long term might seem worth it to attract tenants, but over time expenses might absorb most or all of it. Asking too much might not attract many tenants, or it might put one at risk of tenants falling behind in payments. Striking that fine balance is a business decision all landlords have to make. It is important to know that most tenants are decent people who will treat your property with care and pay their rent on time.
It is often only the ‘bad apples’ that we hear about when the media puts a spotlight on this issue. Outside of credit checks and direct references, there are many ways a landlord can protect themselves, at least at the first level from nightmare tenants.
There are a number of red flags prospective landlords should look for when selecting tenants. A ‘red flag’ is a sign that something is not as it should be, meaning perhaps this prospective tenant might not be your best choice. Some of the ‘red flags’ are:
- A prospective tenant approaches you in the middle of the month and tries to hand over a large amount of cash. Quite often, this is a sign that somebody else evicted them using the shortcut of paying them off to move from their former premises.
- The tenant claims to be ‘self-employed’, but does not appear to have visible signs of income or business ownership. Even home-based businesses usually have an outgoing message on their phone introducing themselves. If you contact them and they do not state their business name, you should wonder. Also, ask for a business card.
- References provided appear to be too enthusiastic in recommending the tenant. Do they just want to get rid of them?
- An employer reference’s telephone number is ‘out of service’.
- Your prospective tenant claims to have ‘handyman skills’ that they are willing to help you with in your rental properties. While it is tempting to have a built-in handy person, many times their ‘work’ becomes subject of a dispute.
How to Protect Yourself
As a prospective landlord, you need to take steps with every applicant to ensure you are not going to get duped. First, it might be helpful to ask for a copy of your prospect’s photo identification. This is not only to ensure that the person in front of you is who they claim to be, but the address on the identification should be noted. If your prospect has not provided you with a reference for that address, you can check the tax register at city hall. This can get the name and contact information for the landlord for that address.
Google your prospective tenant’s name, as well as check any Facebook or Instagram accounts. See if your prospective tenant is saying things online that might concern you, particularly if they might have referred to an employer or former landlord in negative terms. Compare any employment or educational information with what they provide you.
Take note of any license plates, as well as makes and models of any vehicles your prospective tenant might have drove in to come see you. This information would be useful in the event you need to find them after they trash your place in the future or make a midnight move.
Get a credit check from strong prospects. If your prospective tenant does not wish to complete the credit/application process, you do not have to offer them the rental unit.
Ensure Legal Advice is Available
The life of a landlord can take many twists and turns. However, you need to remember that first off, being a landlord is a business. That means you have to treat your landlording services as you would in any other business. Disputes do arise from time to time and when this happens, you want to ensure you have access to the best legal advice you can get.
Browne & Associates Legal Services Professional Corporation provides legal services to landlords to help them protect their investment and enjoy their properties. If you have any questions, do not hesitate to give us a call.