Owning and operating a rental property is much more than just you buying a building and someone else paying you to live there. When renting a property, landlords and tenants are entering into an agreement with each other, and more importantly, a relationship with each other that goes far beyond a mere transaction.
Rental horror stories pop up all the time on both sides of the relationship. Almost every landlord has had tenants that trash a space, fail to make timely payments, or take advantage of lease loopholes; and many renters have dealt with landlords that are ineffective, hands-off, or even flat-out negligent.
Whether you’re a new landlord, or want to become a more successful one, how do you go about building healthy, sustainable business relationships with your tenants?
Strong tenant relationships are an investment in your success
Ask any seasoned landlord who their “best” tenants are, and you’ll hear stories of renters who are quiet, pay rent on time, keep an eye out for the safety of their community and their building, and have likely been there for years. This last bit is important – landlords are operating a business, and one of the key rules of business is that it’s cheaper to retain an existing customer or client than to find a new one.
A good tenant is one who serves you reliable long-term income: they offer consistent on-time payments, few costly headaches, and stability when they’re in a unit for a long time. Having great, long-term tenants requires you to offer value in return, to incentivize long-term occupancy. That means building relationships. It doesn’t have to mean heavy discounts, or becoming every tenant’s best friend. Nor does it mean being a pushover who doesn’t enforce rules. Taking the time to communicate clearly and frequently with your tenants, properly maintaining your property, and engaging in good-faith discussion when issues arise will pay off long-term by filling your units with renters that have no reason to pack up and leave at the soonest opportunity.
A strong lease agreement saves headaches for you and your tenants
And what about that lease? A strong lease lays out expectations, defines duties, and clearly explains the legal recourse for both parties if things go awry. While the human relationships you build might be what keeps your tenants happy, a strong lease agreement is your foundation, because it sets the boundaries for navigating these landlord/tenant relationships.
The key to a strong lease agreement is specificity. The lease is the contract that both parties need to read and sign before the relationship is formalized, and that means it’s in the best interest of both landlords and tenants for a lease to be as detailed and air-tight as possible.
If a lease agreement does not include a specific day of the month upon which rent is due, then a landlord has very little recourse if a tenant chooses to pay later than the landlord expects. Clearly specifying what “damage” means can be the difference between having easy unit turnovers or consistently needing to bring in people to clean and repair after a tenant vacates. If you don’t specify what sorts of maintenance are the responsibility of the tenant vs. the landlord, you risk upsetting and potentially losing otherwise reliable renters when repairs are needed and there’s no clear indication of who will fix it.
These are just a few examples of headaches that can be preempted or easily resolved by a clear, comprehensive, and detailed lease agreement that both parties have read before signing. And if headaches do arise, a good lease will lay out exactly what recourse you and the tenant have as you navigate them together.
Clear Communication is Key
The prime takeaway when renting a property is to communicate clearly, honestly, and frequently. Whether that’s in initial discussions with potential tenants, in the written language of the lease agreement, or as you get to know your existing renters, transparent and detailed communication helps you maintain and foster successful long-term landlord/tenant relationships.
You know how best to run your business, but when it comes to knowing the legal ins and outs of the rental game, rb LEGAL is here to help. For advice on putting together a lease that will minimize future problems, cover all bases, and ensure the rights of all parties are protected properly, call or text us at (763) 582-1414 or email [email protected]