Owning and operating a rental property is far more than just you buying a building and someone else paying you to live under that roof. When renting a property, landlords and tenants are entering into an agreement with each other, and by extension, a relationship with each other that goes beyond mere transaction.
Rental horror stories turn up all the time on both sides of the relationship–just about every landlord has had tenants that trash a space or take advantage of leasing loopholes, and a surprising number of renters have dealt with landlords that are ineffective, hands-off, or even outright negligent.
So if you’re becoming a new landlord (or want to make yourself a more successful one), how do you go about building a healthy, sustainable business relationship with your tenants?
Strong tenant relationships are an investment in your success
Ask any seasoned landlord who their “best” tenants are, and you’ll inevitably hear stories of renters who are quiet, pay rent on time, keep an eye out for the safety of their community and their building, and have likely been there for years. This last bit is important–landlords are operating a business, and one of the fundamental rules of business is that it’s almost always cheaper to retain an existing customer or client than to find a new one.
A good tenant is one who serves you reliable long-term income: they offer consistent on-time payments, few costly headaches, and the type of stability where you can assume they’ll be in that unit for a long time without you having to pay to turn it over. Having great, long-term tenants requires you to offer value in return to incentivize long-term occupancy, and that means building relationships. It doesn’t have to mean heavy discounts or becoming every tenants’ best friend, nor does it mean being a pushover that doesn’t enforce rules. But taking the time to communicate clearly and frequently with your tenants, properly maintain your property, and engage in good-faith discussion when issues arise will pay off long-term by filling your units with renters that have no reason to pack up and leave once the lease is up.
A strong lease agreement saves headaches for you and your tenants
And what about that lease? A great lease lays out expectations, defines duties, and clearly explains the legal recourse for both parties if things go awry. While the human relationships you build might be what keeps your tenants happy, a strong lease agreement is your foundation as it sets the boundaries for navigating these landlord/tenant relationships.
The key to a strong lease agreement is specificity. The lease is the contract that both parties need to read and sign before the relationship is formalized, and that means it’s in the best interest of both landlords and tenants for a lease to be as detailed and air-tight as possible.
If a lease agreement fails to include a specific day of the month upon which rent is due, then a landlord has very little recourse if a tenant chooses to pay later than the landlord expects. Clearly specifying what “damage” means can be the difference between having easy unit turnovers or consistently needing to bring in people to clean and repair after a tenant vacates. If you don’t specify what sorts of maintenance are the responsibility of the tenant vs the landlord, you risk upsetting and potentially losing otherwise reliable renters when repairs are needed and there’s no clear indication of who will fix it.
These are just a few examples of headaches that can be preempted or more easily resolved by a clear, comprehensive, and detailed lease agreement that both parties have read before signing. And if these headaches do arise, a good lease will lay out exactly what recourse you and the tenant have as you navigate them together.
Clear Communication is Key
If you haven’t picked up on this already, the key takeaway when renting a property is to communicate clearly, honestly, and frequently. Whether that’s in initial discussions with potential tenants, in the written language of the lease agreement, or as you get to know your existing renters, transparent and detailed communication helps you maintain and foster successful long-term landlord/tenant relationships.
You know how best to run your business, but when it comes to knowing the legal ins and outs of the rental game, Segal Duffek Moen is here to help. For advice on putting together a lease contract that will minimize future problems, cover all contingencies, and ensure the rights of all parties are protected properly, contact Segal Duffek Moen at 952-358-7400 or by emailing Info@Segal Duffek Moen.com.