Making Property Management Easy
When you have invested heavily in a property, you will be looking for good returns; however, property management can be a difficult task. Here are a few points that can make this job easy, and help you to avoid any legal hassles.
Selecting the Right Tenants
This is one of the most important aspects of property management, which has an overall impact on profitability and avoidance of legal issues. Picking the right tenants is a skill, and involves some investigation. Firstly, you need to know whether the potential tenant really loves your property, as you want someone who will stay for a long term. You can make this out by the person’s interest in your property. If they want to visit other properties before making a decision, then they are still not sure.
You also need to have a system in place, for checking various aspects of the potential tenant. You need to run a check to see if the person is financially sound, and the reason he or she is looking for a new place to stay. Getting feedback from their previous landlord is very good, but this may not be always possible. Select tenants who are employed and have a reasonably good financial background. Check to see if there are any criminal records against the person, and whether there have been any incidents reported in the past.
Drafting the Lease or Rental Agreement
This is the most valuable documentation and it has to be drafted carefully by an experienced attorney. It should include all the points regarding the rent, rental duration, and other terms. Everything should be spelt out clearly so that the tenant is aware of his or her rights and responsibilities, and what services they can expect from you. This is a legal agreement, and you could be sued if you do not adhere to the terms and conditions that you have agreed to in this document. Covering all possible points in the agreement will reduce the chances of legal issues and costly lawsuits in future.
Payment of Rent
You should decide the mode of rental payment; whether you want it by check, auto debit, or cash. It is better to have a payment mode that leaves a trail, so that it can be proved whether the payment was made or not. In cash transaction the tenant can claim that payment was made, when it actually was not so. Even if you issue a receipt, the tenant can claim, you had forgotten to give a receipt.
However, make sure you select a mode that is convenient for the tenant like direct bank deposit, if the tenant does not have a checking account. In the rental agreement also clearly state, the grace period allowed for rent payment, and the penalties for late payment. Also, have a strict policy against partial payments, as it can be very difficult to maintain records and track outstanding amounts when you have many tenants.
This should be held for compensating any damages done to your property, and should never be allowed for compensating a missed rent payment.