When it comes to managing a rental property, there is a lot more that goes into it than simply finding a nice tenant who pays on time. The reality is that there are a comprehensive set of laws pertaining to the management of an investment property. For those who choose to self-manage an investment property, be warned: doing so can generate a larger number of costs and hassles over the long run, as well as increased risk exposure in the form of liabilities.
Self-managing a rental takes finesse and an in-depth knowledge of the law. Some important points to consider include:
- Creating a screening process for potential tenants. One of the first things that an investor should do is screen tenants. This includes having potential tenants fill out rental applications. It’s critical that a property owner run each of the potential tenants credit score to see if any issues or negative reports are on there.
- Developing an accurate, conforming lease. The importance of having a tenant sign a precise, detailed lease with language that is aligned with all of the current state and federal regulations may seem obvious, but some owners overlook it.
- Opening a trust account for handling security deposits. The law mandates that tenant security deposits cannot be intermingled with personal funds. Property owners therefore must deposit tenant security deposits into a NC trust account that is held in a licensed and insured bank or savings institution. The laws are very specific regarding the ways that the monies are reconciled, and it’s required to disclose everything to the tenant.
- Maintaining professional relationships with tenants. Sometimes it can be a challenge to keep a professional relationship, especially with a problem tenant. Before embarking on a path that will make you a landlord, ask yourself: Do I have the tact, finesse and skill that are required to communicate effectively with people of widely differing backgrounds? If not, it may be worthwhile to consider hiring a property manager, especially considering the fact that federal and state laws will always be in play.
- Figuring out what to do when a tenant doesn’t pay. Notice that the sentence doesn’t say if a tenant doesn’t pay. A nonpaying tenant is probably inevitable. Having a written policy regarding nonpayment in the lease will help to ensure that rents are paid on time. It will also help to head off any potential issues or problems.
It is a misconception to think that landlords do not have rights, however it is vital that all tenants are treated with respect, and that any issues that are brought up are resolved in a timely fashion. This includes the disbursement of security deposits after the tenancy is terminated. Regardless of whether a tenant refused to pay the rent, broke windows or stained the carpets, it’s important to follow the laws to the letter when it comes to security deposits. Before any portion of a deposit can be withheld, an itemized list of damages has to be written and delivered to the tenant.
Hiring an experienced and knowledgeable property manager is the best way to avoid hassles and get the best possible return on investment. For information about our rates or how to manage rental properties, please call 910.859.7238, or visit www.UltimateRentalHomes.com.
