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Resources for Investment Property Owners

There was a time, not so long ago, that the intrepid property owners who decided to rent their homes were, effectively, out on a limb all alone. Today, though, even if you opt not to hire a rental property manager, of which there are hundreds of thousands, you have many landlord resources available at your fingertips. Thanks to the internet, you can find answers for any of the myriad questions which come up regularly in a landlord’s life.

Also, because each state’s landlord/tenant laws are listed there, you can usually find the answers to legal questions without incurring the expense of hiring a lawyer. Naturally, there are times when only a lawyer will serve to pull you out of the muck, but you can avoid those costly mistakes by being well informed. Here are a few areas where landlords need the most help.
Rental Agreements

The best place to find a rental agreement which will protect you thoroughly regarding your state’s laws is to check with a local property manager. Of course, the property manager would much prefer you to allow him or her to manage your rental, but they are generally helpful to landlords who want to go it alone. That probably is because they know that after you’ve been at the business of land lording for a while, you’ll be eager to pass your management headaches on to them. If you spend some time with a professional property manager, you may find answers to questions you didn’t know existed. Most states also provide resources like renal agreement forms online.
Reference Checking

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State and federal privacy laws can make checking references a bit tricky. Do investigate your state laws concerning what questions you may ask a former landlord. Interestingly, even though a rental property owner plans to turn over the keys to one of his most significant investments to a stranger, some landlords don’t bother to investigate the reputations of their potential tenants.

That, of course, is foolhardy. Not only should you check the former landlord references, but you should also check the credit history of your applicant. Credit reporting agencies will provide you with a complete credit history for a nominal fee, which most good tenants are happy to pay. Bad tenants will flee when you tell them you require an up-to-date credit report for which they must pay, so this is an excellent way to weed out those applicants.
Deposit Questions

Most states have specific rules and statutes which control how much a landlord can collect for a security deposit. The deposit is also specially earmarked, and there are particular things you cannot spend it on, so be sure you understand the laws around these funds. Most landlord/tenant disputes arise because of disagreements over the charges a landlord makes against the tenant’s security deposit. Understand that the “last month’s rent” is not part of that deposit, and you cannot use it to cover other costs.

On the other hand, if your tenant doesn’t give you notice of his impending departure and leaves owing you rent, you may use his security deposit to pay the last month’s rent in most states.

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Remember also that normal wear and tear may not be charged to your tenant’s security deposit. If you replaced the carpet 10 years ago with carpet expected to last 10 years, and your tenant has lived in the unit for nine years and eight months, you cannot re-carpet it at the tenant’s expense.
Inspections

Your rental agreement with the tenant should contain provisions for regular inspections to the property. However, it’s important that the landlord always make appointments for such walk-throughs. Respecting your tenant’s right to “quiet enjoyment” of the property is part of the secret to a happy landlord/tenant relationship.

When you go to do an inspection, remember to bring a clipboard and the list your tenant made of damages which existed when he or she took possession. You can find forms for this online, and they look official, but a regular list on plain paper will work just as well.

From a business perspective, it’s essential to know and understand what damages or problems exist in the property so that you may make timely repairs. A crack in the grout of a shower wall, when left to soak into the drywall behind, can cause the entire wall to fail. You also need to know this for planning purposes. Check the condition of the roof, the water heater, the garbage disposer and the AC unit since you’ll be responsible for replacing them when the time comes.

Your accountant or financial adviser will be happy to give you a schedule relative to depreciation so that you’ll know when a particular fixture will have outlived its usefulness from a tax-deduction standpoint.

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Also, if the tenant is keeping the place clean and presentable, by all means, tell her so. Like all humans, tenants respond well to praise.all
Insurance Issues

New landlords often forget to consider the insurance implications and liability which can overwhelm an unsuspecting property owner. When you move someone into your house, your insurance needs change.
Be aware that your tenant ought to be covered by renters insurance since your policy will not cover tenants’ belongings if a loss occurs.

Ask your insurance agency for a few packets of information on rental insurance and give one to your tenant at the beginning of his tenancy. Some landlords even make carrying rental insurance part of the rental arrangement and include provisions in the contract to ensure compliance. Speak to your insurance agent about this, as it may result in certain discounts for you as a property owner.

Knowing how to avoid costly pitfalls associated with tenants is also critical. If you use the many resources for landlords who can be found online and at the offices of local professionals, you can keep from being among the thousands upon thousands of property owners who are stuck holding the bag for damaged property and unpaid rents each year.

Resources for Investment Property Owners
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