Property Management

10 Worst Mistakes
You Can Make As a Landlord

It's true. Owning rental property can be a rewarding part-time or full-time business for many families. It's a traditional way many American families have gotten ahead, helped pay for the kids to go to college, built up a retirement nest egg, etc. We recommend it. We enjoy it. But watch out! If you don't avoid the pitfalls, you can have some bad nightmares. What you don't know can hurt you. Here's the 10 worst mistakes you can make. And by avoiding them, you can become a successful, responsible owner.

1 Accepting a new tenant without careful screening.

?The most costly danger to a landlord is a tenant who stops paying rent and delays eviction for many months by tactics that are often completely legal. Don't learn the hard way; screen your tenants in advance for any past problems. Carefully check credit history, personal references, court records - and verify income. Use a credit-checking service and do your own reference and income checks, or use a reputable realtor. Don't forget to check with former landlords - not just the latest landlord, who may want to get rid of a problem tenant. SPOA is currently working to change the laws so that tenants cannot live rent-free for many months.

2 Refusing to rent to someone for illegal discriminatory reasons.

?A prospective tenant who thinks you have refused to rent to him or her illegally - because of race, sex, age, marital status, religion, nationality, ethnicity, sexual preference, source of income, etc. - can accuse you of illegal discrimination. The cost of defending yourself against such a suit, or the cost of settlement, can be very high. It is legal, however, to refuse a person who cannot afford to pay the rent or with a background of trouble with landlords. Be sure to treat all your prospective tenants the same way! Read up on your state's anti-discrimination laws.

3 Not having a written agreement with all tenants.

?Written agreements give you more rights as a landlord than oral agreements and can avoid costly misunderstandings. Examples: (1) An owner usually has no right to enter a tenant's apartment without written permission typically included in a lease. (2) Even though utilities are separately metered, the owner may be liable for all of a tenant's utility costs unless there is a written agreement saying the tenant pays. (3) Often only a written lease can give an owner the right to approve sub-tenants and approve or reject pets. A written agreement does not have to be for a year. You can pick whatever time-frame you wish - month-to-month or year-to-year.

4 Taking a security deposit without handling it carefully!

?Many states have developed strict laws governing the taking of security deposits, to control possible abuse. Owners who don't follow these laws exactly may risk paying as much as triple damages if they get into a dispute with their tenant. Many owners now simply forget security deposits and take the last month's rent instead (but not the last two months' rents - that's often illegal). If you decide you must take a security deposit, check out the law carefully. Give your tenant a correctly worded receipt, complete an "apartment condition" statement, escrow the deposit in a separate account, tell the tenant the account's location, pay yearly interest to your tenant, and (finally) return the security deposit (only with correctly itemized deductions) within 30 days after your tenant moves. Even with all this, many tenants use their security deposit as a last month's rent anyway.

5 Not deleading an apartment when the law requires it.

?Deciding not to delead an apartment is a "tough decision" as much as it's a "bad mistake." In Massachusetts, it is against the law not to delead an apartment when a child under six lives there. Other states often have similar laws. But the cost of deleading is so prohibitive that many owners cannot afford it. And many tenants don't want their owners to delead because they know the cost, the eventual rent increase, the inconvenience and the danger to their children from the deleading process itself. But if you don't delead, you risk paying for deleading anyway, losing months of rent, and maybe paying for a lawsuit if your tenant decides you were negligent in the matter. On the other hand, even when you do delead, if the child gets poisoned from another source (like soil outside), you will likely have to delead again and may get sued anyway. SPOA is currently working to change the present craziness in the nation's approach to lead paint and lead poisoning. We have found much scientific information that says deleading does not prevent lead poisoning. Please note: it is illegal also to discriminate against families with children by not renting to them, but you typically do NOT need to delead an apartment if there are no children living in it.

6 Not responding as quickly as possible to a tenant's
repair request.

?Good relations with tenants make all the difference in the world, for you and your tenant. So even though repairs are often a nuisance (and some tenants may be especially demanding), it is good practice to always respond to every tenant request for a repair and fix the problem. Better yet, keep a record of the tenant's requests and your repairs. Failure to do a repair only aggravates tenants and may cause them to call the local health inspector, at which point they may well be entitled to withhold rent . . . and your relationship becomes contentious, legalistic and ultimately very expensive and very unpleasant.

7 Not acting promptly when a tenant stops paying rent.

?You are entitled to the rent. That's the bargain your tenant made, and you need to help them keep their promise. You should call or notify your tenant if they are more than a few days late in making their monthly payment. And if they are more than two weeks late, give them an official, legal "notice to quit" (they must either pay the full rent owed in a specified number of days or show up in court). Find out exactly what your "notice to quit" must say or it will be ineffective and you'll have to start over again, adding more delays to an already lengthy process. Delays let the tenant get further behind in rent and increase your costs. Landlords almost never get paid the back rent. So act promptly to get your non-paying tenant out and a paying tenant in.

8 Not being polite with a tenant. Or even worse, losing your temper - ever - with a tenant.

?Always be courteous and professional with your tenants, no matter how unreasonable you think they are. If you cannot keep your temper, it may be time to consider getting professional legal assistance to help solve your problem. Losing your temper may cause your tenant to turn to their legal remedies, which are always harsh on landlords.

9 Not thinking twice before you refuse to settle a dispute with a tenant.

?It is almost always better to settle a dispute with a tenant (even if it's not exactly the best deal for you) than to fight it out in court. The landlord-tenant laws are usually extremely unfair to landlords. In addition, tenants often have access to free "legal aid" lawyers who will fight you with tax-and-charity dollars almost indefinitely with all the laws on their side. In the end, it may cost you thousands. It's not worth it just to win a point of pride. Usually, the only time it is really important to fight to the end is to get rid of a non-paying tenant. Even then, a settlement where you pay them to leave may be cheaper than paying even more to your own lawyer to fight to the bitter end. SPOA is working to make eviction laws fair.

10 Not using a lawyer when you get into trouble with a tenant.

?Any trouble. Some landlords say they have good luck doing their own evictions. And that's just what it is: luck. The technicalities are rampant. You don't know them. Your tenant's free lawyer knows every one of those technicalities backwards and forwards. And you don't need just any old lawyer. You need a lawyer who is experienced with landlord-tenant cases.

One more mistake:

Ignoring what's happening at the State Legislature or in the U.S. Congress in landlord-tenant law.

?The laws today are very anti-landlord. But times are changing, especially since the successful Question 9 referendum ended rent control in Massachusetts. SPOA was the organization that initiated Question 9 and fought to victory. So we know that working together, we property owners can make some big changes in the laws, to make them fair. That's why we know how important it is to come together and stick together. That's why we have SPOA.