There is one thing I can always depend upon as a rental property owner and that is eventually the tenant I just rented to will move out.
Vacancy is just one part of a natural cycle of rental property ownership. Many landlords have a fear of, and go to extraordinary lengths to avoid a vacancy. However, I look at a vacancy as an opportunity to increase the value of my asset through capital improvement and increased rents.
The tenancy cycles are before tenancy, during tenancy and, of course, the end of the tenancy.
For each of these very different cycles, processes and procedures can be implemented that will help dramatically in the operation and efficiency of managing our rental property. Many of the activities that occur in each cycle are predictable, which allows for a consistent application of techniques and procedures.
Before Tenancy
Getting your property in order both physically and procedurally at the beginning of the tenancy can be the most time consuming part of the tenancy, but is possibly the most important. Having your rental property in order prior to tenancy not only ensures legal compliance, it also decreases the potential for misunderstandings further into the tenancy cycle.
One of the items frequently mentioned by rental property owners is their desire to find quality tenants. Finding that quality tenant is never foolproof, yet through a sound, effective marketing plan, your odds greatly increase. A time tested marketing plan consists of:
- A clean, well maintained, safe, move-in ready property
- Written policies and criteria for tenant screening are established
- Market rent has been evaluated and determined
- A clear understanding of vacancy rates for the area and what your competitors are offering
Once these items have been established, one only needs to review them as a vacancy occurs and update accordingly. From your marketing plan, you are now ready to create the perfect advertisement to attract, qualify and lease to that quality tenant.
During Tenancy
During a tenancy, one of the most important if not THE MOST IMPORTANT thing is communication. Just because a move-in has occurred doesn’t mean your job is over until the next lease renewal. It’s important to establish an ongoing, open communication path with that new resident. Open communication doesn’t mean calling once a week to check in. A simple email every couple of months during the tenancy goes a long way to maintain a good relationship and to keep the communication channel open.
During tenancy, a landlord must consistently enforce the terms of the lease, property policies and respond accordingly within the constraints of local landlord-tenant laws. Many landlords create unnecessary conflict with their tenants by waiting too long before correcting a non-complying tenant’s behavior. As soon as a violation is observed, a landlord should discuss the issue with the tenant and give the opportunity for correction prior to formal notice being served. This method ensures the tenant correctly understands expectations and also serves notice that the landlord is paying attention to what is happening on the property. Most often, once a tenant recognizes that the landlord is proactive, they also tend to be proactive in maintaining the property, paying rent on time and being respectful of the neighbors.
End of Tenancy
At the time a property notice to vacate has been received from a tenant, an acknowledgement letter should be sent. This letter should show, at a minimum, the date the tenant will vacate, the amount of security deposit being held, instructions on how to finalize utility billing, where to leave the keys and last but not least, a request for their forwarding address. An explanation of how and when a remaining security deposit will be paid can also be helpful to the departing tenant.
Another proven technique is to include a “Move-out Instruction Checklist”. This checklist informs the tenant of your expectations and gives them an itemized checklist to assist in the tenant preparation for turnover.
If possible, arrange the pre-inspection of the unit which allows the landlord to walk through the unit and assess the condition before the tenant has moved. This inspection will allow the landlord to begin scheduling the appropriate vendors as needed or possibly begin marketing the property for a future resident. [To meet the pre-inspection requirement, use AOA’s form 135 – the AB2330 Walk Through / Initial Move-Out Inspection.]
It is advisable for all landlords to put in place efficient processes in order to be ready for each stage in the tenancy lifecycle. Failure to adequately prepare will lessen your ability to be a profitable rental property owner.
Julie Johnson is owner of Smart Choice Realty and a rental property owner. Reprinted with permission of the Rental Housing Association’s UPDATE.