It’s important to look for other sources of income aside from employment to become financially independent. One of the best alternative sources of income is rent. Considering how an increasing number of people nowadays choose to rent living space instead of buying it, investing in rental properties can become a lucrative way to achieve financial independence.
Of course, some caveats come with becoming a landlord. But the one you should be most wary of is bad tenants. Natural disasters can damage your property, taxes can take a chunk out of your profits, but nothing can give you more of a headache than a bad tenant. Here are a couple of suggestions to help protect your investment from a bad situation like this.
Have a Solid Contract
Too often, inexperienced landlords pull a cookie-cutter lessor-lessee agreement off the internet and call it a day. In the event of any mischief, that contract is what’s going to protect your interests and help you collect what you’re owed.
It’s necessary to hire an attorney to write a custom contract for your property and ensure that the appropriate clauses are written in. You’ll want penalty clauses in cases of non-payment, solid agreements on who needs to do what kinds of repairs, etc. Having all the terms of the agreement in writing helps a lot in cases of a dispute, so don’t rely on your tenant being honorable and go for verbal agreement. If you make any deal, have it put in writing.
Keep Meticulous Records
Once you’ve gotten your property in good enough shape to put it on the market for tenants, make sure to take pictures of every single nook and cranny of the place. This will serve as the record of what kind of condition it was turned over to the tenant. Attach copies of these pictures to your contract and have the tenant sign an attestation agreeing that they received the property in this condition.
This will help in cases where you find property damage that goes beyond simple wear and tear. Some tenants will try to blame you for the damage. As long as your records are clear, arguments like this will not hold up in court, and you will be able to collect your dues fairly easily.
Do Your Research
When speaking to prospective tenants, ask them for their contact and social media details. This way, you can do a couple of quick searches online to get a rough idea of what kind of person they are. People can put on an act in person, but their personalities can be completely different.
Checking their social media profiles and looking at the kind of things they’re interested in or get up to can be a great indicator of how they’ll behave as your tenant. Of course, this isn’t to say that their social media profiles are 100 percent accurate representations of who they are, but they can at least provide valuable insight about what kind of tenant they’ll be.
Don’t Be Neglectful
Never leave your properties completely unattended. Too often, inexperienced or lazy landlords are content to cash in the rent checks without keeping half an eye on how the property is doing. It’s especially easy to fall into this trap if you live far from the property. It’s essential to contact your tenant and ask them if they need anything every couple of months at the least. Visual inspection of the property should be done at least once a year to make sure that you’re able to make any repairs that fall under your responsibility in your contract. If, for any reason, you lose contact with your tenant, have a trusted neighbor or friend check the property to see if anything has happened.
What if They Run Away?
Some awful tenants will try to slip out of the property without you knowing to avoid having to a dime. Tenants like this are some of the worst headaches imaginable. When it comes to tracking down individuals like this, it’s best to hire a skip tracing service. Skip tracers hunt down the person trying to evade their obligation and serve them a subpoena to appear in court.
Services like this make it possible for you to collect unpaid rent or even sue your former tenant for damages based on what clauses of your agreement were broken. This can be a tedious process, yes, but it’s necessary in cases where they’ve done severe damage to your property, and collecting the rent that they owe you isn’t enough.