Renting your unoccupied Washington residence or investment property is a great way to bring in extra income, but if you’re a novice landlord, there are some things you should take into consideration to ensure you're following laws regarding tenant rights.
We put together a guide of best practices for newer landlords. These are the things we wished we would’ve known when we first started. These tips are not only to protect you legally, but to ensure healthy long-term relationships for every tenant that comes through your property.
Tenant Rights in Washington State
Be very clear in your rental agreement what the term “Rent” really includes. Legal fees, late fees, utility bills and any other costs related to renting, maintenance or eviction should be clearly explained in the rental agreement. If you don’t classify these as “rent” in the agreement, you won’t be able to claim them as rent in the event of an eviction. If this isn’t defined, the tenant has the opportunity to claim money or fees and this could be a costly error on your part.
Do your research on what type of rental agreement you will provide. There are month-to-month agreements, fixed-term leases and one-way leases. Your tenant is allowed to obtain copies of all signed documents and request proof that you receive the documents that they sign. They can also request return receipts or ask for signatures upon delivery. Keeping everything in writing in this process will make communication easier and will allow both parties to refer to any rules and regulations should a dispute occur.
Keep clear records of your rental property before and after tenants move in/out. Before you enter into a housing agreement with a tenant, take plenty of pictures of the property. Be detailed in your documentation, making sure there are printed dates on the pictures. In addition, landlords are not required to complete move-out inspections, but tenants can request one, which means you will need to walk through the unit with the tenant and sign an inspection report.
Do your research on landlord-tenant laws in your city and state. City and states often have varying laws in regards to landlords and tenants, so the more research you do in this area, the more informed you will be when situations arise. This will reduce your chance of making expensive mistakes. You can read on Washington state’s landlord-tenant laws here.
Seek legal advice when appropriate. You may think you have everything covered, but in the event that a scenario arises that you aren’t sure of how to handle, don’t try to solve it yourself — seek professional legal advice. This is the best way to ensure there you don’t make costly long-term mistakes regarding tenant rights and so forth.
Remember, a successful landlord isn’t just someone who brings in good tenants, but who can retain long-term relationships. These tips can ensure that happens.
That said, you won’t always get good prospects for tenants. You need to have a sharp eye for quality tenants, and more importantly, what constitutes as a “red flag”.
But conducting your screening can be confusing. How do you determine who is a good tenant? How can you tell if they are being honest in their responses?
It is well worth the effort to spend the time identifying warning signs of a troublesome renter. Bad tenants are more than a nuisance: they waste your time, cost you money, and leave you with a mess to clean up.
Avoid these problems by keeping a lookout for these 7 red flags in a prospective tenant:
1. Does a Credit Check Make Them Nervous?
By law, you can’t run a credit check without the permission of your prospective tenant. But, what if they won’t give their consent? Savvy landlords know this often means they have something to hide, from a bad credit history to an eviction or a bankruptcy.
Let the person know that you won’t rent to them unless you first do a credit check.
2. Is Their Credit Score Low? Does It Show Bankruptcy?
When you do run the credit check, you might find a low credit score or a bankruptcy on their record. If the person has made poor financial decisions in the past, it is a good predictor of how he is still handling his bills.
Take it as a sign that he will be late paying his rent and find another renter.
3. Have They Been Evicted?
Any eviction is a major red flag. The main reason people are evicted is because they don’t pay their rent. It is probable that they had the chance to move out before getting evicted. Instead, they chose to stay until they were forced out with a formal eviction.
To avoid the drama and paperwork, move on to another applicant.
4. Have They Moved Yearly?
Though your tenants won’t stay in your building forever, it is easier on you as the landlord to rent to people who will stay at least two or three years.
It makes sense to contact previous landlords to find out how long the prospective tenant lived at their former addresses. If they move every year, you might want to pass them by.
5. What About the Criminal Background Check?
In some states you can turn down a prospective tenant if they have gone to jail. But in others, like California, you cannot discriminate against those who were convicted of specific nonviolent crimes.
Learn the rules in your area so you don’t violate the law yourself. Wherever you live, if the person was convicted of a sex crime or drug dealing, you are in a very strong position for turning down their application.
6. Are There Lies on the Application?
A smart landlord checks the information that the tenant supplies on his application. That means calling former landlords, checking employment, and verifying addresses and income.
You simply can’t rely on your tenant to tell the complete truth. If you encounter any lie, but especially ones about income, employment, and previous rent experiences, it is wise to reconsider renting to them.
7. Do They Seem Desperate? Evasive?
When you talk to the renter, does she seem desperate or evasive? This can mean a problem you don’t want to get involved in.
Trying to get away from an abusive situation can make anyone desperate. By renting to someone in this situation, you are helping her out of a difficult situation. In the process, you can end up with a loyal and stable tenant.
But, if you sense evasion and that something is just not quite right, trust your gut. Move on to the next application.
Other tips to make your life easier as a rental property manager:
As you’ve probably seen already, life as a property manager comes with plenty of things to keep in mind. We wouldn’t call these tips “shortcuts”, necessarily, just ways that can hopefully save you time, money and headaches. Again, things we wished we would have known before.
Get Everything in Writing, Especially when it Comes to Tenant Rights
Organization is key: a wise property manager will always keep updated and accurate ledgers of everything, including maintenance records, complaints, payments, residential inspection renderings, conversations (email, phone, or in person), etc. Having everything in writing insures you from misunderstandings.
Know the Most Common Issues Before They Happen
Understanding the common challenges that befall today’s most successful property managers is the key to preventative maintenance, especially when concerning tenant rights. To make your life easier as a property manager, be sure you set out clear rules for certain behaviors in the rental lease. For example, a tenant who is habitually late on rent should know from the beginning that certain penalties will result in their irresponsible behavior. That way, when the procrastinating tenant complains about you filing an eviction, they will have no feasible argument in court.
Use Technology to Make Things Simpler for Everybody
These days, it’s not exactly safe to take cash payments, nor is it ideal to physically travel to each location to receive rent from the hands on the tenants. Now, there are numerous online payment options available that allow for the immediate transfer of funds without the need for unnecessary interaction – a modern amenity that is usually pleasing to both tenants and property managers.
Keep Friends, Family, and Business Separated
For many, mixing of personal and professional life—especially when it comes to having friends as tenants—might not end pleasantly. Basically, we don’t recommend renting to people you know. Kindly refer them to another place and remain a happy property manager (and friend) for longer.
Maintain an Emergency Fund
Life happens, right? It’s crucial to be prepared for unforeseen repairs and other costs. How much, you might ask? In most cases, it’s a good idea to have at least three months worth of expenses saved for half of your properties. And if you make a withdrawal, be sure to replenish the account as soon as you can.
Keep Banking Accounts Separate
For one, the state of Washington requires you to keep separate bank accounts for different security deposits. Each unit should have its own individual account, and you should leave it there until the tenant moves out.
Get Active with Online Marketing
The web has become the new marketplace for rentals. People may still do business in the real world, but they are making their decisions online by checking out listings, clicking through websites and reading reviews. With all the competition that exists in the digital marketplace, and the ever shortening attention span of internet users, it can be tough to even be seen. Here are some quick tips for maintaining an active online presence:
- Create a Facebook page. If today’s renters are on Facebook every day, that’s where you want to be – telling your story, showcasing your listings and nurturing possible leads.
- Invest in SEO work. With so many websites around, it has become extremely difficult to rank near the top of search engine results for specific keywords.
- Go mobile. To appease busy browsers and attract today’s renters, it’s vital that your mobile site is quick and easy to navigate as the majority of users will abandon your site if they don’t find what they want right away.
- Start blogging. When renters and investors are searching for properties, it’s a good bet that they are reading up on market trends as well. Your blog will not only provide the valuable information that’s being searched for, but also highlight your expertise and possibly solidify a lead that was on the fence.
- Launch e-mail campaigns. A targeted email campaign will improve your chances of repeat business and inspire people to talk about your services. Even if they don’t even open or read your emails, seeing your name in their inbox will keep you at the front of their mind when their lease is up, or they are ready to invest.
5 Common Mistakes that are Costly for New Property Managers
We wanted to end our guide with some final pieces of information that can greatly ease your life as a property manager. These are things we hear from newer property managers that we’d love to prevent you from experiencing.
1. I don’t need to run credit checks on everyone – sometimes I can just ‘trust my gut’
When screening prospective tenants, you’ll be surprised to find how many nice looking, polite, and seemingly responsible renters have been previously evicted or haven’t been paying their bills. It is 100% worth it to look at every tenant’s rental history, credit report and background check.
2. If I rent to a new resident at a higher rate I will make more money than if I retain current residents.
Tenant retention is your number one goal. Each time a tenant chooses not to renew their lease, it could cost you an average of $3,900. This figure includes average income loss due to vacancy, costs for the maintenance team to make the unit ready for the new resident, costs to market and re-rent the unit, and, of course, your time. Even if you’re able to re-rent that property for $50 more per month, it would take six and a half years to recoup the initial loss.
3. Raising rent will make a resident want to move out. And, if I don’t raise rent they will stay longer.
Many landlords fear the conversation on raising rent and don’t want to encourage their residents to move out. But, most renters understand that rent control is a rare situation and will be willing to pay an increased rate as long as the property is being managed to their satisfaction. Likewise, keeping the rent low won’t always guarantee that tenants will stick around, especially if the property is being poorly managed, which has been cited as many tenants’ number one reason for vacating.
4. I don’t allow residents to have pets because they will destroy my properties.
Making your property strictly pet-free may cause your business more harm than the policy is worth – in many cases it’s actually a smarter business decision. More and more, pets are becoming cherished members of the family. According to a survey conducted by Apartments.com, 75 percent of the 1,100 renters they questioned own pets, which is a substantial increase from only 43 percent in 2012. Therefore, you could be missing out on a vast majority of today’s renters by saying no to their furry friends. Furthermore, residents don’t want to lose money on a deposit on account of their pets, so most tenants will be equally as inclined to keep damage to a minimum.
We understand that the early stages of renting out property can be rough, to say the least. We are always welcome to offer advice about tenant rights, or any issues that may arise during the renting process.
If you have any questions, you can contact us here or give us a call at (360) 696-3111.