Landlords, You Must Improve Your Bedside Manner: Here’s How

A landlord recently asked me to help her with an eviction. Although we've managed many of her properties in the past, she decided to self-manage this particular one to help out a co-worker she heard was in desperate need for a rental. As you can imagine, the arrangement went south quickly.

The landlord assumed the co-worker would take care of the house, pay on time, and be grateful for the opportunity. Alas, after three months, the rent checks stopped coming in, but the excuses certainly did not. Unfortunately, no deposit was collected, nor was a move-in report documented — after all, this was a "nice person."

When she finally had the courage to asked her tenant to pay up or get out, the co-worker was suddenly an expert in renter’s rights, almost as if she’d intended this all along. The tensions grew at work, people started forming opinions, and after she finally left the property, the landlord was stuck with thousands of dollars in repairs and nearly $10,000 in unpaid rent.

Eviction scenarios have become increasingly common in the last few years. In 2015, more than 2.7 million renters in the United States faced eviction. To keep yourself out of unpleasant situations, you must learn how to set boundaries and turn down potential tenants without appearing unkind.

Renting and Accountability

Owners, landlords, renters, and property managers all have one thing in common — they’re human. No way around that.

Humans make good and bad decisions. In the case of our landlord and her tenant who wouldn’t pay, both parties were at fault. Yes, the tenant should have taken care of her obligations to the house and the debt, but the landlord also should have protected herself from getting into a no-win situation.

To hold renters responsible for their actions, landlords must first be accountable to themselves.

How to Protect Yourself

Real estate is a business, not a nonprofit. We are in this game to provide safe housing, and we expect a return on our investments. You can still be kind to your friends and family without sacrificing your business in the process. Follow these four tips to stay out of trouble and keep both your personal and professional lives running smoothly:

1. Never rent as a favor. Do not rent to a friend, family member, or colleague because you want to help him or her out of a tight spot. Odds are good that the person asking for a discount needs that extra money for a reason. If you offer a convenient way for someone to prey on your inability to say “no,” don’t be surprised if someone you once trusted doesn’t see the same limits to your charity as you do. People with troubled pasts are often looking for someone unsuspecting just like you.

With the rental vacancy rate hovering at 5.85 percent — according to a 2015 census survey — there are still plenty of places for people in need to live. Help your loved ones and friends by leveraging your connections to find somewhere else to rent, but don’t sacrifice your livelihood as a favor to another.

2. Treat every renter the same. If a normal renter needs decent credit, verifiable income, and a deposit to move in, so does someone you know.

Once you start compromising during the approval process, you open the door to other favors in the future. It doesn’t matter whether it’s your co-worker or your sister — in order to rent from you, everyone must meet the same requirements. By staying accountable to your own personal standards, you tell the other party that your time and resources are worth their respect.

3. Give them the power to walk away. According to MySmartMove, 56 percent of landlords won’t rent to tenants with bad credit checks, no matter how much they like them. A deal is a deal is a deal; no exceptions. Honor your friendship by setting standards that they must meet. If they’re unable to meet them, that’s on them, not you.

Relate to your prospects’ problems by putting the ability to solve them back in their hands. Say something like, “If I understand correctly, you would like to rent my house, but you need to wait until you correct an item on your credit report and come up with the deposit.” This lets them know that you do want to help, but you can’t hand over keys until they meet their end of the bargain. If they’re eager and honorable, they’ll take care of their obligations and get back to you in a timely manner. If not, let them walk away knowing you did all that you could to help.

4. Execute everything in writing. Even between the closest friends, verbal promises are not enough for property agreements. Get everything in writing drawn up in a legal document and according to your state laws.

If someone is unwilling to sign a document affirming she means what she says, walk away from the deal. Written contracts are one of the few ways landlords can protect themselves. Don’t be afraid to maintain that protection, and be suspect of anyone who treats friendship as a bargaining chip or excuses not to sign.

According to the aforementioned source, 2,654 new people are entering the U.S. rental market every day. Working with friends and family is tempting, especially with an empty property on your hands, but you don’t have to sacrifice professional and personal well-being to fill your rentals. By following these strategies, you can keep growing your business without damaging your relationships.