Renting out your properties is one of the easiest ways to earn passive income. All you need to do is maintain the property’s condition and advertise it for tenants. Sounds easy, but isn’t. Finding tenants isn’t the biggest issue, but finding the right one is. Probably the most common issue among landowners is renting out a property to bad tenants.
Bad tenants can become a headache quickly. Not only do they risk damaging your property, but may also jeopardize your financial situation. To avoid unreliable, unpleasant renters and to dodge renter-owner disputes, follow the steps below.
There are several laws regarding rental properties that also dictate the rights of a tenant and the owner. Tenancy laws are constantly changed and revised as per areas. For instance, the laws regarding rent cap in Turkey differ from the rent cap Dubai laws.
Hence, stay updated about the laws so you don’t find yourself in a sticky illegal situation. Moreover, if you know your laws as a landowner, you’ll be prepared and informed about what to do in case a problem arises.
The most plausible way to protect yourself from bad tenants is by screening potential tenants. The process can be time-consuming, but it’s better to be safe than sorry.
Check the applicant’s employment status, income, credit score, pending debts (if any), rental history, etc. You should also get on a call with their references, former landlords, or simply meet the applicant in person. Body language tells you so much about a person.
Collect a reasonable yet compulsory amount as a security deposit from the tenant along with a month’s rent. This secures the tenant’s intention of moving in. A security deposit can either be refundable or non-refundable.
When the tenant moves out or disappears without paying rent, this money is used to cover up the costs of any property damage and compensate for unpaid rent. Hence, landowners prefer a non-refundable security deposit. Furthermore, if the tenant has pets, demand a higher deposit amount since it may cause more property damage.
Not all tenants will look after the property as their own. Hence, conducting regular property inspections is necessary. The ideal time for inspections would be every 3 or 6 months. This way, the tenant will also be cautious about maintaining the property. In addition to that, the property won’t be shockingly damaged at the end of a tenancy. Lowering the costs of getting it back in shape.
The most common mistake landowners make is not putting thought in their rental agreement. Going with the basic tenancy agreement seems like an easy option, but will cause regret in case of a bad tenant.
Take the help of a professional to draft a solid and detailed rental agreement. Make sure to include all the acceptable and unacceptable things, even if that includes no loud music after a certain time, etc. A rental agreement guarantees you protection from being deceived by the tenant while providing guidelines in case the tenant doesn’t follow certain rental clauses.
Despite the screening, the deposit, and the carefully drafted rental agreement, you may still encounter risks. But investing in the right landlord insurance guarantees your safety completely.
Sometimes the damage caused by tenants cannot be covered by the security deposit. Or worse, tenants may sue you for unexpected reasons. This is when landlord insurance comes in to save your day.
If your rental properties are the only source of your income, then you can never be too cautious before choosing a tenant. Apart from that, eviction is a long and costly process, and bad tenants also give you a bad reputation. Thus, be extra careful before selecting your tenants to protect yourself and your property.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.
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