The hassle element is certainly one reason why so many landlords engage letting agents, but should you choose to let your property out yourself, here are some tips and pitfalls to look out for:
1. Screen your tenants properly. Don't rent to anyone before checking their affordability (payslips and three to six months’ bank statements), credit history, employment references and previous landlord references. If this is not done properly, it often results in problems later - a tenant who pays the rent late or not at all, damages a property or allows undesirable visitors might have a record of doing this repeatedly. Be sure to have a written rental application with supporting documents to get all of the prospective tenant’s information.
2. Get things in writing. Be sure to use a written lease agreement to document the important facts of your relationship with your tenants - including when and how you handle complaints and repair problems. A comprehensive lease agreement is essential as it sets the tone of the relationship between a tenant and landlord by establishing what's expected from both parties and stipulating what will happen if one party deviates from the agreement.
3. Handle the deposit paid by the tenant correctly. Establish a fair system of setting, collecting, holding, and returning security deposits. Inspect and document the condition of the rental unit before the tenant moves in so as to avoid disputes over refunding the deposit when the tenant moves out. These inspections should be done with the tenant present.
4. Make repairs to the unit timeously. Keep up to date on maintenance and repairs needed to the unit and ensure these are done when requested by the tenant. If your property is not kept in good repair there is very little chance that good tenants will want to stay on. Remember, your tenant is your customer. If you want him to pay on time, make sure that he is happy.
5. Keep accurate records. Keep a detailed account of any legal or financial transactions with your tenant, as well as formal and informal correspondence. It's important to have a paper trail of any maintenance issues you've dealt with, as well as warnings or requests you've issued, so that you can refer to them should the need arise in future. Keep copies of all emails or letters to and from your tenant, and write down the dates and details of any telephone conversations you have.
6. Important note: If a verbal negotiation regarding outstanding rental has taken place where the landlord has allowed the tenant to make payment later than the rental due date, the tenant is able to rely on the defence that an informal payment plan was entered into with the landlord. As a result, the non-paying tenant is not an illegal occupant, and a judge will not be able to grant an Eviction Order.
A property is a big investment and you don’t want to end up in a situation where you lose money (either through damage or bad management) on the investment because you didn’t follow all the necessary steps to prevent this from happening. Prevention is better than cure. Handling the letting and management of your property yourself means you do not have an agent deducting money from the rental income every month. However, does it really represent a saving for you? Particularly if you are new to letting a property, it may be better to pay a qualified letting agent to handle the workload, especially as their fees are tax deductible.
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