Owning income property is having a small business that runs out of your home. It has products (rental units), inventory (vacant units) and expenses. You have customers, your tenants.
The tenants are the most important part of this business. The key is getting good tenants, so let’s talk about what a good tenant is. Good tenants have the following qualities.
- They pay their rent on time.
- They call you when there is an emergency only (i.e. pipe burst, roof leaking, things are not working in the unit).
- They are late paying their rent.
- They call for every little thing that goes wrong. Here are a few calls I’ve taken from tenants.
- My carpet is stained
- My faucet leaks.
- There is something wrong with the unit every month that they want you to fix.
- Make your rents a little lower than your competitors, so you get more applications and can pick your renter.
- Run a complete credit report for the applicant.
- Call their current landlord and ask the following…
- Do they pay their rent on time
- Do they ask for lots of maintenance on their unit?
- Over all did you like them as a tenant in you property?
- Call their current employer?
- How long have they been employed there?
- What is their current salary?
What do you do if you get a bad tenant?
For the big stuff, remodel my kitchen, paint my apartment, new carpeting, ask them if they would be willing to have their rent increased to pay for this expense. The equation for this is
Cost ($)/12 = rent increase
Most of the time, the tenant will tell you they would rather have it the way it is rather than have their rent increased.
The Late Payers
- An attorney that deals with evictions.
- A set course of action which all of the tenants sign as part of their rental agreement.
2. If the rent has not been paid by the 3rd day after the Three Day Notice has been delivered, you immediately start the eviction process with your attorney. Typically, the attorney will charge you $250.00 for the eviction. Your tenant will be charged the $250.00 attorney fees for the eviction process. After the eviction process has started, the tenant pays the past due rent + $25.00 late charge + $250.00 Attorney fees.
Tenants that are just bad tenants
- Tenants the throw wild parties
- Tenants that complain about every little thing
- Tenants that you get complaints from the other tenants about.
Get good tenants and work to make them happy. If you have good tenants the amount of time you will have to spend on managing the property is minimal.