Being a landlord isn’t for the faint of heart. It requires unfaltering dedication and quick decision-making. Sure, the payback is worthwhile if you make the right moves, but there can be some nightmares along the way: pipes bursting overnight, tenants lying on rental applications, or pets destroying the house.
Some problems are catastrophic, while others are just a headache. No matter how tough (or simple) the fix, the following five problems often leave landlords looking for a way out.
1. Renovating and Choosing Upgrades
When it’s time for renovations, landlords want the upgrades that get the most bang for the buck. Should you choose granite or formica? Laminate or wood floors? Should there be ceiling fans in the bedrooms? Do the missing pickets on the fence need to be replaced?
Some of these choices make a big difference to the renter, while others are insignificant. As the landlord, you want to invest in the upgrades that pay off, but sometimes the choice just isn't clear.
2. Choosing the Right Price
When setting the rental rate, landlords often price a property based on their current financial situation. If you use your mortgage to gauge the price, you could either really underprice or overprice your property.
Both have severe disadvantages. If you underprice it, you lose money. If it sits vacant because it’s overpriced, the property loses its new listing appeal and people start wondering what’s wrong with the house. Plus, vacant houses are more susceptible to vandalism and have to be regularly cleaned until occupied.
3. Writing A Lease That Ensures Legal Coverage
When you’re writing a rental property lease, it takes an expert to anticipate everything that needs to be covered. You need a lease with special provisions that guard you against unnecessary problems, but basic online templates only cover the bare minimum. Using one of these may seem like a way to save money, but the clauses you leave out will turn into expensive oversights.
You need to address every potential situation: smoking, changing oil in the garage, having a waterbed or fish tank in the house, keeping hoofed animals in the yard. We focus on these problems extensively in our leases to prevent long-term (expensive!) damage. DIY leases just don’t cover all your liabilities.
4. Screening Problems
As you look for the right tenant for your property, you’ll need to know the ins and outs of current housing laws. By following equal housing opportunity regulations, you’ll ensure there is no discrimination in your selection process.
You also must keep up to date on legal changes. Just recently, the regulations changed regarding service animals. Now, if you have an applicant with a service dog, you have to approve them (even if you typically don’t allow animals) and waive the pet deposit.
In addition to the legality of screening, consider if you trust the applicant. Some outright lie to their potential landlord. The screening process gone awry can develop into intense problems landlords want to avoid at all costs.
5. Rental Repairs
It’s 3 am and you get a call that the house is flooding. What do you do and who do you call?
Other times, you get no call at all. In fact, you arrive at your property to see that the tenant has made unapproved modifications to the house. Maybe they took out or added a structure (like a deck or storage building).
How do you legally handle their unauthorized use of your property? No landlords want to deal with those surprise repairs.
The Biggest Problem: Security Deposit Returns
If you don’t adhere to the timelines and paperwork that accompany security deposits, you’re in for a legal disaster. It may not sound like a big deal, but if you return a security deposit improperly, you could lose your rental business.
Ask yourself these questions to test your understanding of security deposits:
- Do you know the timeframe in Texas of when to return a deposit?
- Do you know which forms and documents to send the tenant?
- Do you know you should send a certified letter confirming that you sent them?
- Do you know what you can legally deduct from a security deposit?
- Do you know how to send a Security Deposit Itemization (SDI)?
- How do you respond when a tenant says the SDI is incorrect?
If you can get into trouble anywhere in property management, it’s with security deposit itemization. If you don’t send it within 30 days, you're liable for up to three times the amount.
Then once you send it, if they argue any item, you have to back it up with before-and-after photos and applicable invoices. We take hundreds of photos before we list a house to preemptively prepare for those discrepancies.
Even the way you hold the money matters. You have to keep it in an escrow account that isn’t commingled with any other funds.
The Best Way to Avoid These Problems?
We all love the profit that rental properties bring, but it doesn’t always come easy. Fortunately, LEAP Property Management will deal with the problems you dread. If you’re listing your house and looking for reliable property management, give us a call and we’d be happy to answer your questions!