How to reduce your risk of problems with tenants.
By BreAnn Stephenson
One of the riskiest times for your investment property is during an eviction. An angry tenant’s feelings can lead to very destructive behaviors. In addition, insurance policies do not cover intentional damage done by tenants, so you get to foot the repair bills. Sadly, this damage can often cost you tens of thousands of dollars – not to mention your time – when an eviction could have been avoided in the first place.
Sowing and reaping is more than just a farming concept.
By “sowing” a properly screened tenant, you may be able to avoid the many hardships that are placed on you, your tenant and your property in the event of an eviction.
Diligent work during the placement process will “reap” a qualified, responsible renter. By consistently following the Fair Housing and Fair Credit Reporting Acts, you can also significantly diminish the likelihood of an eviction.
In the rare occurrence where an eviction does arise, an amicable way of letting the steam out of the pressure cooker is to implement a Cash for Keys program. With Cash for Keys, the tenant simply agrees to vacate the property within a specific time frame, giving the keys to the owner or property manager in exchange for a small sum of money. While the cash amounts and time frame are flexible, the goal is to lessen the strain on the evicted tenant so they no longer see you as the “bad guy.” This can thwart their desire to “get revenge” by destroying your property.
When using the Cash for Keys method, still get everything in writing. Have the tenants sign a “Relocation Assistance Agreement,” which includes a provision stating the house will be turned over in good condition, broom-swept clean, and with all appliances and fixtures in place. Most importantly, make sure you are there when the tenants move out. After they vacate, secure the property by changing the locks. Make sure all access points (windows and doors on all levels) are locked and secured. And be sure to monitor the location after they are gone, especially within the first week or two.
A Cash for Keys agreement may help prevent tenants from coming back to cause significant damage after all their valuables are out, but the best measure of protection from damaging evictions is to place a reliable renter in the first place. If you take the proper precautions during the screening process, you may do more than simply avoid “sowing” a bad tenant, you may “reap” one that will keep your property looking great for years to come!