[Avoidable] Traps for the Unwary Landlord

It takes a few times around the track to iron out the kinks in your forms and modus operandi for your rentals. But after a while, you should have a pretty well-oiled machine. Bigger Pockets has a ton of resources for these things. Someone once said “Better than learning from your own mistakes is learning from someone else’s.” I think I might have actually said this to one of my kids – in any event – here’s my top ten pitfalls that can be avoided . . . and how to actually avoid them:

1) You should have the right to access your premises (at any time, for sure) but specifically to show the property to prospective buyers or new tenants. And it should be in tidy fashion. So make sure that, at least 30 days prior to the end of the term, the tenant has the obligation to keep the premises in a neat, orderly and clean condition. If not, the lease should give you the right to arrange for professional cleaning at the tenant’s cost plus an administrative fee.

2) Avoid city fines for landscaping and prevent expensive repairs like foundation or roof. The tenant should be responsible for all of the following related to landscaping: (a) watering foundation if no sprinklers, (b) if sprinklers, using them when needed, (c) keeping bushes trimmed no higher than the bottom of the window sills, (d) using sprinklers in accordance with code limitations and keeping weeds cut in accordance with local city code, and pay all fees/fines for failure to do so, and (e) keeping trees/bushes trimmed away from the roof. Provide a hose and sprinklers when the tenant moves in so they don’t have an excuse. The tenant’s failure to follow these rules should allow you the right to charge them to rectify, plus an administrative fee.

3) Failure to have smoke detectors or a fire extinguisher . . . This one is easy, provide the tenant with a fire extinguisher when they move in. And keep batteries handy – if you perform a periodic walk through of the property, leave batteries for the smoke detectors. Consider also, hardwiring all smoke detectors so they never go dry; for $100-$200 initial cost, they work forever. If not, the lease should give you the right to replace batteries/fire extinguisher at the tenant’s cost plus an administrative fee (see the theme here?)

4) Avoid very costly HVAC capital repairs by requiring the tenant to change the filters. The lease should give you the right to inspect the filters and . . . you guessed it . . . charge the tenant the cost plus an administrative fee for its failure to do so. Send periodic reminders (via text) to change the filter.

5) Provide the tenant with a $5.00 toilet plunger at move in. ‘Nuff said.

6) Avoid expensive gutter, soffit or fascia repairs by requiring the tenant to keep the gutters and downspouts clear of any debris.

7) Avoid service “no show” costs when you have to call a repairman and the tenant isn’t home (if you arrange for them to be there rather than go yourself). Build into the lease that the tenant must pay for the actual cost of any trip charge for unnecessary repair trip charges incurred.

8) Don’t pay for toilets, new windows or new doors that you can get free. Some cities have weatherization programs that provide these items for free. Look into it with the local city hall. Many of these programs are income driven and require proof of income from the resident and copies of past electric/gas/water bills. So make sure your lease requires the tenant’s cooperation in your efforts to weatherize the premises and provide these documents.

9) Stop paying for a washer and dryer. They don’t last very long. And when you have to replace them, buy used because tenants beat them up. I’ve since given up and included the following in my leases: “Landlord does not provide washer/dryer; to the extent a washer and/or dryer are located on the Premises, it is as an accommodation only and Landlord is not responsible for any repair, maintenance or replacement thereof.”

10) Insulate yourself from liability related to the property. This is elementary, but don’t hold your properties personally, but rather hold them in an entity you have created to limit your liability. And while a separate entity for each property makes sense from this standpoint, it can be expensive. Some states allow entities to create “series” (sort of like different shares) that can further isolate each property from all others. If so, create a separate series for each property separating the debts and liabilities from one property from the others. And get a hefty umbrella policy – they are not expensive.

A wise man said it’s better to learn from someone else’s mistakes rather than your own.  Me.  Hopefully you can save yourself some trouble by incorporating one or more of the ideas above.

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