Having an investment property is a great way to generate passive income and boost your coffers. Whether you are a property investor with multiple homes for lease or the owner of a multi-family property, the last thing you want to do is lease your apartment to potentially poor tenants. Unreliable and inconsistent tenants can take your investment property from an asset to a liability. So, how can you protect your apartment from bad tenants?
Getting landlord insurance is one of the best decisions you can make when you rent property to tenants. This type of insurance is designed to protect your investment from potential risks. It is a good idea to get an insurance quote before choosing a policy. This way you get the policy that will serve your specific situation and concerns. And although this insurance is not required in every state, it is still a great protection to have.
Never make an agreement with your tenant that is not contractual. That means no verbal agreements, no email agreements unless you’re emailing a legally binding written contract, and no agreements via text message. All contracts and lease agreements need to be clear and legal. There should be strict rules laid out and consequences must be enforced when rules are broken. Tenants who do not respect the confines of their lease tend to be trouble, and when the rules, expectations and consequences are clear it is easier to weed out the bad tenants and release them from their lease with (hopefully) minimal damage to you.
Proper screening is a must. When potential renters go through a background check, credit check, references, and income verification, you are more likely to find reliable tenants that can hold up their end of the bargain. You absolutely have to do your due diligence.
Part of your lease can require that your tenants have renter’s insurance. Renter’s insurance covers their property in case of fire, theft and other unfortunate circumstances. Renter’s coverage also typically covers living expenses should your home become temporarily uninhabitable. When your tenant has this type of coverage, they may be less likely to pass their losses off onto you, their landlord. It also gives your renter increased peace of mind because unforeseen things happen far too often.
Hire a Property Management Company
A property management company or a landlord attorney can give you an added layer of security. It can keep you out of potentially messy situations. They will deal directly with your tenants so you don’t have to. They handle the marketing, the screening maintenance, rent collection and more. This service will undoubtedly cost you money, but you have to weigh the risks and your level of preparedness.
There are a lot of benefits and joys to being a landlord, but leasing to potentially poor tenants is definitely not one of those perks. There’s a lot you can do to protect yourself from unpleasant tenants and circumstances, so stay vigilant and get help when you need it.