Tenants' Rights and Responsibilities

Investing in real estate is an excellent way to create wealth by using Other People's Money. You will be using the bank's money to purchase a property and your tenant's money to repay the bank.

If you can afford to subsidize any shortfall there may be between rental income and mortgage repayment, you are in business to become a landlord. You must also make allowance for vacancy periods, levies, rates and taxes. Your local chamber of commerce, real estate agent or homeowners association can give you information to help you do your calculations.

Your rental agreements must make provision for annual escalation in rent, cel out the shortfall in repayments. You will then be ready to add another property to your portfolio. Furthermore, the rental income from your first property counts towards your personal income, which helps you qualify for a mortgage on a second property - and so on.

Do your homework thoroughly. Invest in the type of properties where the rental demand is high and in an area where there is good growth in real estate prices. Get advice on estate planning before you decide on whether to buy the property in your personal capacity, a partnership, living trust etc.

When you become a landlord, the most important part is finding good tenants. Thorough tenant screening is crucial and well worth paying for. You can rather have an empty apartment for a month, than filling it in a hurry with a bad tenant. A one-month vacancy will cost you a lot less in the long run.

As a landlord, you must familiarize yourself with the renter's rights in your specific area. More than the legal rights though, a landlord should consider good tenants as a valuable asset and must look after them as any business must look after their customers.

Most disputes that occur between landlords and tenants fall into one of two categories. On the one hand, we have fabricated squabbles between “con-artist tenants” and/or “rogue landlords”; on the other are legitimate disputes between two honest parties. While an in-depth evaluation of the former group would certainly be entertaining, this article will focus on the latter.

Most landlord/tenant disputes in the second group can be avoided by employing a consistent unit condition process and thorough documentation. In fact, most landlords (or property managers as the case may be), follow some sort of unit condition process and have some sort of written description.

Documentation is typically signed by both the landlord/property manager and the tenant. However, often times, these descriptions are nebulous and are subject to interpretation. And most times, these forms are completed quickly and without any real attention to detail.

Inevitably, a dispute between the landlord and tenant results when the condition of the unit at move-out is compared to an inaccurate or incomplete initial unit condition assessment. If the assessment contains photos of the surfaces, appliances, fixtures, etc., of each room in the unit, disputes are far less likely on move-out.

As more and more landlords and property managers realize this fact, we’re witnessing the birth of a new service offering, typically provided by asset inventory documentation companies. Basically, the third party firm is engaged by the landlord/property manager or the tenant to create a unit condition assessment with photos that the landlord/property manager, tenant and documentation specialist can sign. An added benefit to both the landlord/property manager and the tenant in this situation is an objective third party assessment of the unit in question. So, moral of the story: objective documentation on move-in is the surest way to avoid a dispute on move-out.