Property owners considering renting a residential property face many challenges in today’s rough and tumble marketplace. That’s why we’ve created this primer for the inexperienced or first-time owner/landlord.
The first key decision is whether you as a landlord will be directly involved in finding, screening and selecting the tenant and continued management of your property, along with providing the appropriate documentation. The alternative is to hire a reputable property manager. Regardless of which option you choose, both require due diligence.
Becoming A Landlord
Choosing to be directly involved with all areas of owning and renting your property can be time-consuming and will require your attention to detail. You will be responsible for screening tenants, preparing documents, as well as maintenance and repairs of the property. You must also be familiar with and understand the landlord/tenant laws.
I have found that the easiest, most reliable and cheapest way to find a qualified tenant is by using the Craigslist website. To be effective, your listing should contain recent photographs of the property along with an enthusiastic description.
When screening prospective tenants, keep in mind credit checks, income and references. Additionally, to avoid fair housing complaints and lawsuits, you should be familiar with antidiscrimination laws. Your decisions must be based on business reasons such as bad credit history, insufficient income, bad rental history, inability to come up with the deposit or some other condition of tenancy.
Property Management Companies
Duties of property managers include qualifying tenants, accepting rent, responding to and addressing maintenance issues, and providing a buffer for those landlords desiring to distance themselves from their tenants. Pay particular attention to property management contracts which may contain pitfalls for ambiguous fees such as trip charges or contractual requirements to use specific vendors associated with the property management company. In such cases, the property manager may receive an override beyond the actual cost of repair and maintenance.
Preparation Of Leases
The landlord-tenant relationship is regulated by complicated laws governing all aspects of renting residential property. The law favors tenants and imposes numerous obligations and duties on landlords. In addition to avoiding disputes, a lease with clear provisions nudges the landlord to deal with key issues that might otherwise be overlooked before starting the tenancy.
I have found that the best form for landlords in a residential tenancy is the California Association of Realtors (“CAR”) Residential Lease. It can be used for a term or month-to-month agreement. The CAR Lease form is fair, balanced and thorough. Depending on the property, certain disclosures must accompany the lease at the inception of the term.
Avoiding Legal Disputes
It is necessary for a landlord or property manager to be current with applicable municipal, county and state laws to address legal subjects such as evictions, notices for non-payment and claims of habitability issues. To avoid disputes and legal problems, consider the following:
- Know your rights and responsibilities under federal, state, and local laws by seeking experienced legal counsel to prepare your lease and disclosures.
- Make sure the terms of your lease or property management agreement are clear.
- Keep communication open. If there is a problem – for example, a disagreement about the landlord’s right to enter a tenant’s unit – see if you can resolve the issue by talking it over.
- Keep copies of any e-mails and correspondence, and make notes of conversations about any problems. For example, tenants should ask for repairs in writing and the landlord should keep a copy of the repair request and note regarding when and how the problem was resolved.
Landlords must take carefully measured steps to ensure a profitable and problem-free tenant relationship, which will ultimately keep you out of the eviction arena. Speaking as a San Diego landlord attorney and a current landlord, I can assure you that it is not an arena you wish to visit.