Tips for the Homeowner Landlord in Difficult Economic Times

Renting seems to make sense, you rationalize. You own a seasonal home. For much of the year, it remains vacant, and particularly in difficult economic times, the expenses to sustain it can become onerous. Or, perhaps, you own a home and are relocated for a period of time on business. Why not turn a profit, you theorize, and simultaneously have the peace of mind that someone is caring for your home while you are elsewhere?

These are just two of many circumstances that motivate homeowners to consider renting their properties. Almost always, finances rest at the top of the priority list when the rental issue is contemplated. The income will pay the taxes...it will pay for maintenance...it will provide some extra much-needed cash. But the income might also come with a steep price.

Should conflict arise in the form of late or ignored rent, property damage, and/or other lease violations, there is a firmly held belief that the courts will almost always be sympathetic to the plight of the tenant. Unfortunately, there are many who clearly understand the inequities of the system and stand ready to take advantage. After all, the landlord cannot evict the tenant unilaterally. The landlord cannot forcefully extract rental fees from the tenant. In some cases, it is necessary to engage in protracted legal maneuvers to even regain access to your own house!

There are some basic preparatory steps to take before wading into these unchartered waters:

Iron Clad Lease - Though many feel a lease is legally laughable, NOT having one creates a credibility issue in the event the landlord needs to pursue legal action. Research a basic landlord/tenant model agreement, and then liberally personalize it leaving no stone unturned. Be sure to seek the advice of an attorney as you travel through this process. It's imperative.

Background Check - Securing references from a prospective tenant is standard operating procedure, but a landlord is not likely to discover any significant information from this process. Though it may cost a small fee, use background checks to dig beneath the surface. Legal difficulties, bill payment issues, and other news would be considerably helpful.

Know Your Property - Before the tenants take residence, photograph every nook and cranny of your home to underscore its condition and be sure this visual record is electronically dated. Invite witnesses to review the condition of the house just before the tenants move in. Repeat this process after they move out if damage has been done.

Monitoring - Make it clear to the tenants that during their stay, it's important to have access to the house for inspection purposes. If the tenants balk at this request, it's fair to have second thoughts about their intentions.

Record Keeping - Be sure the tenants pay rent by check or money order so a dated record of transactions is always available. A continuous account of rent paid and rent owed must be kept and distributed to the tenant monthly.

Communications - Should problems arise, communicate with the tenants in a traceable manner (certified mail, etc.)

When it proceeds as planned, and preparations are taken seriously, renting your property can be a rewarding, and fruitful, experience. But it only takes one nightmarish tenant to change a landlord's entire outlook on the benefits.