Learn the facts about renting an apartment before you set out to become a landlord. Find out about the tenant-landlord relationship, insurance laws, and how find and retain good tenants with these tips.
Before you venture into becoming a landlord, you need to know the facts about apartment renting. Monthly rent payments are a great source of supplemental income and some landlords can make a living doing it full time. There are some legal pitfalls and other considerations that could bankrupt you or cause a financial hardship if you’re not careful, however.
There’s an entire body of law dedicated to the landlord and tenant relationship. You don’t need to know them all, but there are several key legal facts about renting an apartment that you need to know upfront:
- You cannot evict a tenant without a court judgment. Doing so is referred to as “self-help," and you can end up in a lot of legal and financial trouble if you don’t file an evictions lawsuit and win the case before locking out your tenant, or using some other means to throw them out.
- The apartment must be in inhabitable condition prior to moving in and while the tenant remains on the premises. For example, if the pipes break in the winter and water is flooding the tenant’s apartment, you must pay for repairs within a reasonable time frame. The tenant would not be expected to live in those conditions.
You’ll likely lose a case as a landlord if you have an oral lease agreement. That’s not law, it’s just one of those facts about apartment renting that you need to know. Judges don’t deal too kindly with landlords when getting a lease agreement is so easy to do. Don’t rent your apartment without one.
- It’s perfectly legal, and it’s good business practice, to restrict the persons living in the apartment you rent out. You can require that the tenant seek your approval first before subletting the apartment, or adding roommates. You’ll protect your investment and other tenants if you have the opportunity to conduct your own background check.
You may not need to hire one now, but you should build a relationship with an eviction attorney. It’s unpleasant to think about it, but you may need their help someday.
Insurance protection is just as important as legal considerations. You probably don’t have the cash to replace your home or property if the tenant starts a fire, or if a natural disaster devastates the property. Even if you did have the cash, buying property insurance is a better way to pay for property damage. If you’re a homeowner renting out a room, call your insurance company and confirm that damages that occur as a result of the tenant’s actions are covered. You might have to buy a rider or buy a separate policy. If you’re not renting out your home, then you’ll have to buy rental property insurance. One fact about renting out an apartment that landlords and tenants get confused over is who’s covered by rental property insurance. The answer is: You, the landlord. The apartment structure, appliances, furniture that you own, or anything else you own is covered, and you’re protected if a liability lawsuit is brought against you by tenants. Renters insurance covers the tenant and without it they have to pay for damages to their belongings on their own.
You don’t have to spend a dime on advertising to rent your apartment these days. Between Craigslist.com and social media channels, such as Twitter and Facebook, you can find tenants. There’s the traditional method as well, which landlords still use effectively today, and that’s posting flyers at supermarkets, coffee shops, diners and other places that prospective tenants frequent. Instead of spending money on too much advertising, use those extra dollars to make the apartment marketable when tenants come by to walk through.
It’s cheaper to hold on to a tenant for a long time than it is to keep renting the same apartment over and over again to different tenants. Tenant retention saves you money and hassle. Work to establish a good relationship with your tenant. Make repairs on time and be responsive to reasonable requests. Keep the lines of communication open so that they don’t start to feel as if you don’t care about their living environment or experience. Simply being available and responsible will pay dividends.
Applying these facts about apartment renting will help you become a better landlord. Your tenants will spread the word about you, whether it’s good or bad, so why not give them something good to talk about.
Image Credit: Michal Zacharzewski